Happiness and Monetary Factors

Abstract

Previous literature studying happiness, or subjective well-being, has mainly analyzed happiness in relation to income. However, such an approach is incomplete, as assets and debt provide additional information related to an individual’s economic well-being. The purpose of this thesis is to analyze the inclusion of assets and debt in the model of one’s subjective wellbeing. In addition, interaction effects between income and assets, and income and debt, will be examined. Through the use of ordered probit regressions, we find that assets and debt must be included in order to model one’s subjective well-being. Interaction effects provide interesting insights, and these effects are discussed. However, in line with previous literature, we find that non-monetary factors are very important in explaining one’s level of happiness.