Income, relational goods and happiness

Abstract

Our empirical analysis on the determinants of self declared happiness on more than 100,000 individuals from representative samples in 82 world countries does not reject the hypothesis that the time spent for relationships has a significant and positive impact on happiness. This basic nexus helps to understand new unexplored paths in the so called "happiness-income paradox". To illustrate them we show that personal income has two main effects on happiness. The first is a positive relative income effect which depends on individual's ranking within domestic income quantiles. The second is determined by the relationship between income and relational goods. In principle, more productive individuals may substitute (if the income effect prevails over the substitution effect) worked hours with the nonworking time made free for enjoying relationships, when they have strong preferences for them. The problem is that these individuals tend to have ties with their income class peers who share with them a high opportunity cost for the time spent for relationships. Hence, a coordination failure may reduce the joint investment in relational goods (local public goods which need to be co-produced in order to be enjoyed together) and, through this effect, individuals in the highest income quantiles may end up with poorer relational goods. The impact of personal income on happiness through this channel is therefore expected to be negative.

Is it Pleasure or Health from Leisure that We Benefit from Most? An Analysis of Well-Being Alternatives and Implications for Policy

“…5 There are two important features of the above literature that are worth noting. The first is that active leisure, through sports, is associated with increases in both well-being and health, but, significantly that there are impacts on the former through the relational and social nature of the activity independently of an explicit focus on health (for example Becchetti et al, 2008;Becchetti et al, 2011;Becchetti et al, 2012). The literature also finds that active leisure through sports can simply be 'fun' as well as healthy (Dolan et al, 2014).…”

Job satisfaction in Italy: individual characteristics and social relations

“…A recent explanation of the happiness-income paradox has been provided by the modern relational theory of happiness. It explains the Easterlin paradox, arguing that higher income levels are associated with a propensity to over-consume material goods and to underconsume relational interactions which are an important determinant of subjective life satisfaction (see Becchetti et al 2008;Bruni and Stanca 2008;Becchetti et al 2009). …”

“…First, it contributes to the growing economic literature on happiness (for latest reviews of this literature see Di Tella and MacCulloch, 2006;Frey and Stutzer, 2002;and Van Praag et al, 2003). Within this literature papers that use social interactions as determinants of life satisfaction are Bjørnskov (2006), Helliwell (2003Helliwell ( , 2006Helliwell ( , 2010, Becchetti et al (2008), Stanca (2008), Powdthavee (2008) and Becchetti et al (2009). Second, the paper contributes to the literature on social capital (for an exhaustive survey see Durlauf and Fafchamps 2005).…”

Happiness and relational goods: well-being and interpersonal relations in the economic sphere

“…Instead, relational activities where the identity of the individual is less relevant, such as time spent with work colleagues or members of one's own church, are not significantly related to life satisfaction. That relational goods have a large and significant positive effect on life satisfaction is confirmed by Becchetti et al (2009a), a closely related study. Another result is that television viewing plays a significant role in explaining underconsumption of relational goods (see also Bruni and Stanca 2006, on the role played by television for the aspiration treadmill).…”