Oil prices and life satisfaction: asymmetries between oil exporting and oil importing countries

Abstract

In spite of general consensus on the importance of oil prices for objective measures of economic well-being across countries, almost no research has been carried out to analyse the effects of oil prices on subjective well-being internationally. Using the World Values Survey (2009), we help fill this gap by studying the effects of oil prices on life satisfaction for two groups of countries, oil importers and oil exporters. Although some previous studies have shown negative effects of oil prices on subjective well-being of one oil importing country the United States, since it is an outlier in terms of dependence on automobiles and in gasoline consumption per capita, these findings may not be representative of other oil importing countries. Our results show that, in fact, oil prices have quite strong negative effects on life satisfaction in a sample of over 40 oil importing countries. By contrast, for oil exporting countries for which there have been virtually no previous quantitative studies, but theoretical analyses suggest the results could be ambiguous, we find strong positive effects on life satisfaction. Hence, our results reveal quite strong asymmetries in the effects of oil prices on life satisfaction between oil importers and oil exporters.