Social Indicators Research

, Volume 114, Issue 3, pp 1109–1124

Evaluating the Link Between Perceived Income Adequacy and Financial Satisfaction: A Resource Deficit Hypothesis Approach

  • John E. Grable
  • Sam Cupples
  • Fred Fernatt
  • NaRita Anderson
Article

DOI: 10.1007/s11205-012-0192-8

Cite this article as:
Grable, J.E., Cupples, S., Fernatt, F. et al. Soc Indic Res (2013) 114: 1109. doi:10.1007/s11205-012-0192-8

Abstract

Data from an economically and racially diverse sample (N = 258) was used to determine (a) if an association between objectively measured income and perceived income adequacy exists, (b) how well individuals assess the adequacy of their income, and (c) if a bias exists, can these estimates be used to describe a person’s overall level of financial satisfaction? Duesenberry’s (Income, saving, and the theory of consumer behavior. Harvard University Press, Cambridge, 1949) relative income hypothesis and Kyrk’s (The family in the American economy. University of Chicago Press, Chicago, 1953) resource deficit hypothesis were adopted for use as the conceptual framework for this study. A positive but modest association between objective and perceived income adequacy was noted. It was also found that individuals do not do a particularly good job of accurately assessing their income adequacy. Finally, perceived income adequacy estimation bias was found to be associated with financial satisfaction. Those who perceived their income to be deficient were less satisfied financially. Policy and practitioner implications from the study are discussed as a means for improving financial satisfaction at the individual and household level.

Keywords

Perceived income adequacyFinancial satisfactionWell-being

Copyright information

© Springer Science+Business Media Dordrecht 2012

Authors and Affiliations

  • John E. Grable
    • 1
  • Sam Cupples
    • 1
  • Fred Fernatt
    • 1
  • NaRita Anderson
    • 1
  1. 1.Family Studies and Human ServicesKansas State UniversityManhattanUSA