There is a lot of research on the effect of income on happiness, but little research into the effect of how income is spent on happiness. In this paper, we take stock of the scattered findings on this matter. The review covers 423 research findings observed in 108 survey studies. These findings are entered in the World Database of Happiness and this allows us to limit this review to the main tendencies, while providing the reader access to full details of the data using links to that on-line findings archive. The first question considered in this paper is how much consumption is optimal happiness wise. The available data show positive links with saving and spending, but do not yet tell us what mix is best in what situations. The data are more informative when it comes to major consumer decisions. Homeowners tend to be happier than people who rent their house. This difference is universal and is at least partly driven by a causal effect of home-ownership on happiness. People who have a car also tend to be happier than people without, though luxury cars do not add more to happiness than an economic car. We still have no answer to the main question: What patterns of consumption provide the most happiness for what kind of people?
Keywords: life-satisfaction, consumption, saving, informed choice, research synthesis
|Series||EHERO working papers|