Mediating role of financial satisfaction between income and subjective wellbeing: an evidence from Pakistan

Abstract

The present study aims at analysing the role of income on subjective well-being (SWB) through the mediation channel of financial satisfaction (FS) by deploying the generalised structural equation model (GSEM) with order logit after collecting the data from 1566 households in rural and urban Punjab, Pakistan. Results of this study illustrate that education, income and household assets related to FS are significantly positive, while these variables had no significant relationship with SWB. Moreover, findings of the study showed that income does not affect SWB of people unless they are financially satisfied with the overall position of their household. Health, social capital and freedom of choice are also significant predictors of SWB. The present study suggests the policy makers to lower the interest rate to encourage investment among lower- or middle-income group, which may lead to an increase in their assets and consequently, an increase in financial and subjective wellbeing.