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Life satisfaction, income and personality traits
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Proto, Eugenio and Rustichini, Aldo (2012) Life satisfaction, income and personality traits. Working Paper. Coventry: Department of Economics, University of Warwick. Centre for Competitive Advantage in the Global Economy (CAGE), Volume 2012 (Number 86). (Unpublished)
Text (Working paper)
WRAP_CAGE_86.2012_proto.pdf Download (769Kb) |
Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
Abstract
We show that personality traits mediate the effect of income on Life
Satisfaction. The effect is strong in the case of Neuroticism, which measures the
sensitivity to threat and punishment, in both the British Household Panel Survey
and the German Socioeconomic Panel. Neuroticism increases the usually observed
concavity of the relationship: Individuals with higher Neuroticism score enjoy income
more than those with lower score if they are poorer and enjoy income less if they are
richer. When the interaction between income and neuroticism is introduced, income
does not have significant effect on his own.
To interpret the results, we present a simple model where we assume that (i) Life
Satisfaction is dependent from the gap between aspired and realized income, and this
is modulated by Neuroticism and (ii) income increases in aspirations with a slope
less than unity, so that the gap between aspired and realized income increase with
aspirations. From the estimation of this model we argue that poorer tend to overshoot
in their aspiration, while rich tend to under-shoot. The estimation of the model
also shows substantial effect of traits on income.
Item Type: | Working or Discussion Paper (Working Paper) | ||||
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Subjects: | B Philosophy. Psychology. Religion > BF Psychology H Social Sciences > HB Economic Theory |
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Divisions: | Faculty of Social Sciences > Economics | ||||
Library of Congress Subject Headings (LCSH): | Households -- Economic aspects, Cost and standard of living -- Economic aspects, Quality of life -- Economic aspects, Happiness -- Economic aspects, Satisfaction -- Economic aspects, Personality, Neuroticism | ||||
Series Name: | Centre for Competitive Advantage in the Global Economy (CAGE) | ||||
Publisher: | Department of Economics, University of Warwick | ||||
Place of Publication: | Coventry | ||||
Official Date: | September 2012 | ||||
Dates: |
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Volume: | Volume 2012 | ||||
Number: | Number 86 | ||||
Status: | Not Peer Reviewed | ||||
Publication Status: | Unpublished | ||||
Access rights to Published version: | Open Access (Creative Commons) | ||||
Funder: | Economic and Social Research Council (Great Britain) (ESRC), National Science Foundation (U.S.) (NSF) | ||||
Grant number: | RES-074-27-0018 (ESRC), RES-062-23-1385 (ESRC), SES-0924896 (NSF) | ||||
Version or Related Resource: | Also published under Warwick Economic Research Papers (TWERPS) 2012. Number 988 | ||||
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