The Effects of Wealth and Income on Subjective Well-Being and Ill-Being

Headey, Bruce; Wooden, Mark

The Effects of Wealth and Income on Subjective Well-Being and Ill-Being

IZA Discussion Paper No. 1032

26 Pages Posted: 2 Sep 2004

See all articles by Bruce Headey

Bruce Headey

University of Melbourne - Melbourne Institute of Applied Economic and Social Research

Mark Wooden

University of Melbourne - Melbourne Institute of Applied Economic and Social Research; IZA Institute of Labor Economics

There are 2 versions of this paper

Date Written: February 2004

Abstract

The accepted view among psychologists and economists alike is that household income has statistically significant but only small effects on measures of subjective well-being. Income, however, is clearly an imperfect measure of the economic circumstances of households. Using data drawn from the 2001 and 2002 waves of the Household, Income and Labour Dynamics in Australia (HILDA) Survey, this paper demonstrates that wealth, which can be viewed as providing a degree of economic security, is at least as important to well-being and ill-being as income.

Keywords: income, wealth, subjective well-being, life satisfaction

JEL Classification: D19

Suggested Citation: Suggested Citation

Headey, Bruce and Wooden, Mark, The Effects of Wealth and Income on Subjective Well-Being and Ill-Being (February 2004). IZA Discussion Paper No. 1032. Available at SSRN: https://ssrn.com/abstract=516883