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Reference dependent financial satisfaction over the course of the Celtic Tiger: a panel analysis utilising the Living in Ireland Survey 1994-2001

Citation
Delaney L, Newman C & Nolan B (2006) Reference dependent financial satisfaction over the course of the Celtic Tiger: a panel analysis utilising the Living in Ireland Survey 1994-2001. Trinity Economic Papers (TEP) Series, 2006-11. Trinity College Dublin, Department of Economics.

Abstract
The link between income and subjective satisfaction with one's financial situation is explored in this paper using a panel analysis of 4,000 individuals tracked through the course of the 'Celtic Tiger' boom period, 1994-2001. The impact of the level of individual and household income, the time-path of income and the impact of reference group income on financial satisfaction are all considered. To the extent that income influences financial satisfaction, there is strong evidence from this paper that household income has a greater effect on financial satisfaction than individual income. There is also evidence that changes in income have an independent effect on financial satisfaction with the time derivative of income entering positively in the financial satisfaction equation. Thus, our paper gives further evidence to support the hypothesis that individuals process changes as well as absolute levels of income. While reference group income has a negative effect at the start of the period it has no effect at the end.

Keywords
Well-being; Financial satisfaction; Reference-dependency

JEL codes
D60; I31

StatusPublished
AuthorsDelaney Liam, Newman Carol, Nolan Brian
Title of seriesTrinity Economic Papers (TEP) Series
Number in series2006-11
Publication date06/2006
URLhttp://ideas.repec.org/p/tcd/tcduee/tep200611.html
PublisherTrinity College Dublin, Department of Economics
LanguageEnglish
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