Does the Market Make us Happy? The Stock Market and Well-being

Aurora Murgea () and Robert D. Reisz

Economia politica, 2013, issue 1, 69-86

Abstract: In the last decades, a growing body of literature was dedicated to the analysis of the determinants ofwell-being. Despite that, the relation between well-being and capital markets has never been investigated,presumably due to the scarcity of subjective well-being time series. The present paper tries to fill thisgap explaining why the capital market evolution has an impact on subjective well-being and investigatingthe relationship between well-being and the stock market in the USA. Empirical tests, using the GalluppHealthways Well-being Index, Standard & Poor's S&P 500 and the VIX volatility index show a strongand statistically significant impact of the stock market on well-being. The channels of influence are bothmonetary, through the income influence, and psychological due to the increase in uncertainty associatedwith the growing financial fragility and instability. These findings show that pursuing financial stabilityshould be a priority in the agenda of policymakers in order to achieve both economic development andindividual well-being.

Keywords: J.E.L. D60; D53; G10; I31 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:mul:jb33yl:doi:10.1428/73100:y:2013:i:1:p:69-86

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