Consumption Theories and Consumers' Assessments of Subjective Well‐Being

Abstract

The purpose of this research is to examine the relationship between psychological well‐being and objective, economic well‐being as measured using three different economic theories of consumption behavior. The theories examined are the life cycle income hypothesis, the relative income hypothesis, and a resource deficit hypothesis. The results from analyses of the Wisconsin Basic Needs Study data demonstrate the importance of careful economic variable construction and support the economic presumption that income and life satisfaction are positively related. The relative income hypothesis model accounts for the greatest explained variance and is also superior in that it is easier to specify.