Abstract
The recent literature developed in the field of happiness economics highlights the overvaluation of income and material prosperity as determinants of happiness, and calls into question many of the assumptions of traditional economic theory linked to “rationality” and the “non-satiety” of the consumer. This article aimed to study which factors explain individual subjective well-being, paying special attention to the role of income and the incidence of social variables and focusing on the case of Spain. As a novelty, this research introduces variables such as trust or the perception of justice, among others. Based on the analysis of the European Social Survey and through the estimation of an ordered logit, we find that, in line with the theory of happiness economics, the material aspects do not play a relevant role as explanatory of subjective well-being, unlike social aspects, such as sociability and trust in people (social capital). In addition, our results indicate that in the case of Spain, the most materialistic people are associated with a lower level of happiness. Thus, it seems that the excess of concern for material and economic issues in the pursuit of happiness undermines socioeconomic and environmental sustainability by causing the “wealth destruction effect”.
Highlights
Until the nineties of the last century, little attention had been paid to the analysis of subjective well-being in the context of happiness economics
Our goal is to study the main determinants of happiness, paying special attention to the Easterlin paradox, deepening the understanding of the question about what is the real role of income as a determinant of subjective well-being
Where Y is the dependent variable, x is the vector of independent variables, β the vector of regression coefficients to be estimated and, ε is the error term. As it has been highlighted before, this paper aimed to focus on the role of social factors besides the economic factors when explaining the subjective well-being of people
Summary
Until the nineties of the last century, little attention had been paid to the analysis of subjective well-being in the context of happiness economics. In the last thirty years, there is a broad economic literature on happiness with many contributions from psychologists and sociologists [1] Studies conducted in this area frequently criticize the precepts of neoclassical theory that highlight the figure of homo economicus as a rational being, maximizer of his own interest, neutral in terms of values, and practically asocial [2,3,4]. Along these lines, the microeconomic assumption of non-satiety is exemplary in that the individual as a consumer always wants more. The new approach questions a good part of the traditional assumptions of the economy [12]
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