The Effects of Wealth and Income on Subjective Well-Being and Ill-Being

Abstract

The accepted view among psychologists and, increasingly, economists is that household income has statistically significant but only small effects on measures of subjective wellbeing. Income, however, is clearly an imperfect measure of the economic circumstances of households. Using data drawn from the 2002 wave of the Household, Income and Labour Dynamics in Australia (HILDA) Survey, this paper demonstrates that wealth, which can be viewed as providing a degree of economic security, is at least as important to well-being and ill-being as income.