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Wealth, Assets and Life Satisfaction: A Metadata Instrumental-Variable Approach

Zuzana Brokesova, Andrej Cupak, Anthony Lepinteur and Marian Rizov

No WP 4/2021, Working and Discussion Papers from Research Department, National Bank of Slovakia

Abstract: We analyse the relationship between wealth/assets and life satisfaction. Using the Household Finance and Consumption Survey microdata from Slovakia in 2017, we first show that real assets (being the major component of household wealth) and life satisfaction are positively correlated. We address endogeneity concerns thanks to the metadata of the survey: we use the interviewers' ratings of the respondents' quality of dwellings to instrument the value of real assets. We show that the 2SLS estimate is positive and higher than the baseline OLS estimate, confirming that real assets are measured with error in survey data. Finally, we use the paradata to show that living next to a neighbour with better house quality significantly decreases one's happiness. Our results suggest that around half of the total effect of real assets on life satisfaction is relative.

JEL-codes: C26 D60 G51 I30 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2021-07
New Economics Papers: this item is included in nep-eur, nep-hap, nep-isf and nep-tra
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