Life satisfaction and satisfaction in domains of life: is it a simple relationship?

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This paper studies the nature of the relationship between life satisfaction and satisfaction in domains of life. The domains-of-life literature assumes that a person’s overall satisfaction with his or her life depends on his or her satisfaction in many concrete areas of life, which are classified into a few main domains of life. This paper addresses the issue of what characteristics the relationship between life satisfaction and satisfaction in domains of life has by focusing on its specification. The domains-of-life literature has commonly assumed that an additive relationship between domains satisfaction and life satisfaction does exist. This paper argues that the use of an additive relationship has substantially restricted our comprehension of the relationship; since it makes impossible to empirically address questions such as: Is life satisfaction just a weighted average of domain satisfactions? How easy is it to substitute satisfaction in one domain by satisfaction in another? Is it reasonable to expect similar additional benefits when we continuously improve satisfaction in one domain? What happens with our life satisfaction when we manage to continuously improve satisfaction in all domains? What happens with the importance of one domain when satisfaction in another domain declines? The paper argues that there could be substantial gains in the understanding of the relationship by assuming alternative specifications. At an empirical level the investigation works with four different specifications: an additive relationship, a semi-logarithm relationship, a logarithm–logarithm relationship, and a constant elasticity of substitution (CES) relationship. Using a database from Mexico, the investigation finds out that an additive specification provides – at least for Mexico – a goodness of fit similar to those of alternative specifications. However, there are some relevant issues in the relationship between domains satisfaction and overall life satisfaction that cannot be studied with an additive specification; hence, the␣use of an alternative specification – in particular a CES specification – is preferable if the objective is to understand rather than to predict life satisfaction.