Relational Goods, Sociability, and Happiness

Abstract

This paper empirically investigates the impact of relational goods on individual life satisfaction. By relational goods we indicate the affective/expressive, non instrumental, side of interpersonal relationships. The homo oeconomicus view of human nature is questioned by the recent upsurge of empirical studies on the determinants of self declared happiness, that show that an increasing income does not always lead to more subjective well being (Easterlin's famous (1974) paradox of happiness). The theoretical literature on relational goods has isolated various mechanisms which may induce an under-consumption and under- production of relational goods. The hypothesis we test is that people with a more intense relational life are less affected by this relational poverty trap and are therefore happier. Our findings does not disprove our hypothesis: relational goods turn out to have significant and positive effects on self declared life satisfaction, when other determinants isolated in the literature as important are taken into account and when the inverse causality nexus i.e. from more happiness to a more intense relational life is also taken into account. Finally, we show that gender, age and education matter and in particular that the effects of sociability on happiness are stronger for women, older and less educated individuals. These findings can be useful in designing and evaluating public policies with a direct or indirect effect on the quality and quantity of relational goods.