Financial Satisfaction in Old Age: A Satisfaction Paradox or a Result of Accumulated Wealth?
- 653 Downloads
Prior research consistently has found that older adults, despite low incomes, are more financially satisfied than younger adults. This “satisfaction paradox” is typically attributed to elders’ supposed psychological accommodation to poor financial circumstances. We advance a different explanation, one that focuses on substantial age differences in wealth and liabilities. Data are from the first wave of the Norwegian NorLAG study (n = 4,169). Findings support the hypothesis that an examination of a wider range of economic variables shows that material circumstances are more important to the financial satisfaction of the elderly than previously believed. A considerable part of the higher financial satisfaction with increasing age can thus be explained by greater assets and less debt among the aged. Nonetheless, assets and debt do not mediate this relationship at lower incomes, because older people with little income have very little accumulated wealth. As older people with little income and wealth have a much stronger tendency to be financially satisfied than their younger, equally poor counterparts, an “aging paradox” still remains in this field.
KeywordsFinancial satisfaction Age Satisfaction paradox Norway Assets Debt Income
- Ahuvia, A. C. (2002). Income and happiness, finding a job and a salary that works for you. Paper presented at the University of Michigan School of Business, Ann Arbor, MI., January 16, 2002.Google Scholar
- Atkinson, A. B., Rainwater, L., & Smeeding, T. M. (1995). Income distribution in OECD countries: Evidence from the Luxembourg Income Study. Paris: OECD.Google Scholar
- Burholt, V., & Windle, G. (2006). The material resources and well-being of older people. Bangor, Wales: Joseph Rowntree Foundation.Google Scholar
- Campell, A., Converse, P. E., & Rodgers, W. L. (1976). The quality of American life: Perceptions, evaluations, and satisfactions. New York: Russell Sage Foundation.Google Scholar
- Crystal, S. (1996). Economic status of the elderly. In R. H. Binstock & L. K. George (Eds.), Handbook of aging and the social sciences, (4th ed. pp. 388–407). San Diego: Academic Press.Google Scholar
- Deaton, A. (2007). Income, aging, health and wellbeing around the world: Evidence from the Gallup World Poll. NBER Working paper No. 13317. National Bureau of Economic Research, Inc.Google Scholar
- Epland, J., & Kirkeberg, M. I. (2002). Hvor stor var din inntekt i fjor? Inntekt oppgitt i intervju og på selvangivelsen [What was your income last year? Self-reported and tax record income]. Samfunnsspeilet, 6, 2002.Google Scholar
- European Commision (2001). Proposal for a regulation of the European Parliament and of the Council concerning community statistics on income and living conditions (EU-SILC). Brussels: EU-SILC.Google Scholar
- Ferring, D., & Filipp, S. H. (1997). Subjektives wohlbefinden im alder: struktur- und stabilitätsanalysen. Psychologische Beiträge, 39, 236–258.Google Scholar
- George, L. K. (1992). Economic status and subjective well-being: A review of the literature and an agenda for future research. In N. E. Cutler, D. W. Gregg, & M. P. Lawton (Eds.), Aging, money, and life satisfaction (pp. 69–99). New York: Springer.Google Scholar
- George, L. K. (1993). Financial security in later life: The subjective side. Philadelphia: University of Pennsylvania.Google Scholar
- Halvorsen, E. (2003). Hvorfor sparer de eldre så mye [Why do the elderly save so much?]. Samfunnsspeilet, 3, 35–41.Google Scholar
- Headey, B., Muffels, R., & Wooden, M. (2005). Money doesn’t buy happiness. Or does it? A reconsideration based on the combined effects of wealth, income and consumption. Schmollers Jahrbuch, 125, 131–144.Google Scholar
- Hermalin, A. I., Chang, M. C., & Roan, C. (2002). Economic well-being: Insights from multiple measures of income and assets. In A. I. Hermalin (Ed.), The well-being of the elderly in Asia: A four-country comparative study (pp. 295–360). Ann Arbor: University of Michigan Press.Google Scholar
- Holden, K., & Hatcher, C. (2006). Economic status of the aged. In R. H. Binstock & L. K. George (Eds.), Handbook of aging and the social sciences (6th ed. pp. 219–237). San Diego: Academic Press.Google Scholar
- Holmøy, A., & Høstmark, M. (2000). Undersøkelse om omfanget av utgifter til helse- og sosialtjenester: dokumentasjon og tabellrapport [A documentation of health and social services expenses]. Oslo: Statistics Norway.Google Scholar
- Jesuit, D., & Smeeding, T. M. (2002). Poverty levels in the developed world. Luxemburg income study working paper no. 321. Syracuse, New York: Maxwell school of citizenship and public affairs.Google Scholar
- Juster, F. T., Smith, J. P., & Stafford, F. P. (1999). The distribution of wealth. Journal of Economic Perspectives, 13, 242–244.Google Scholar
- Liang, J., & Fairchild, T. J. (1979). Relative deprivation and perception of financial adequacy among the aged. Journal of Gerontology, 34, 746–759.Google Scholar
- Liang, J., Kahana, E., & Doherty, E. (1980). Financial well-being among the aged: A further elaboration. Journal of Gerontology, 35, 409–420.Google Scholar
- Pedersen, A. W. (2004). Fattigdom i “verdens rikeste land” [Poverty—In “the richest country in the world”]. Plan, 3, 24–29.Google Scholar
- Praag, B., & Ferrer-i-Carbonell, A. (2004). Happiness quantified: A satisfaction calculus approach. Oxford: Oxford University Press.Google Scholar
- Radner, D. B. (1992). The economic status of the aged. Social Security Bulletin, 55, 3–23.Google Scholar
- Slagsvold, B. (1985). Inadequate living conditions and yet satisfied in old age. Ageing-living conditions and quality of life, NGI report 5/85. Oslo: Norsk Gerontologisk Institutt.Google Scholar
- Slagsvold, B. (2004). Morgendagens eldre: Blir de mindre beskjedne og mer kravstore [Tomorrow’s elderly: Will they be less modest and more demanding]? In K. Thorsen (Ed.), Nye tider, nye livsløp, nye eldre? Oslo: Norsk Selskap for Aldersforskning.Google Scholar
- Smeeding, T. M. (1990). Economic status of the elderly. In R. H. Binstock, & L. K. George (Eds.), Handbook of aging and social sciences (3rd ed. pp. 362–381). New York: Van Nostrand Reinhold.Google Scholar
- Smeeding, T. M., & Sandstrom, S. (2005). Poverty and income maintenance in old age: A cross-national view of low income older women. New York: Syracuse University.Google Scholar
- Statistics Norway (2002a). Boliger, etter bygningstype, byggeår og eie-/leieform [Dwellings by tenure status]. Retrieved May 20, 2004, from http://www.ssb.no/emner/02/01/fobbolig/tab-2002-09-23-08.html.
- Statistics Norway (2002b). Income and property statistics for households. Retrieved May 2, 2004, from http://www.ssb.no/emner/05/01//nos_inntektformue/nos_d310/nos_d310.pdf.
- Statistics Norway (2005). Selveide boliger, forholdet mellom ligningsverdi og salgssum, 2005 [Dwelling ownership, ratio between assessed tax value and sales price]. Retrieved June 25, 2006, from http://ssb.no/emner/05/03/sbolig/.
- Statistics Norway (2006). Økonomi og levekår for ulike grupper [Personal economy and housing conditions]. Retrieved, March 13, 2007, from http://www.ssb.no/emner/05/01/rapp_200708/rapp_200708.pdf.
- Zimmermann, A. (2006). Financial satisfaction over the life cycle: The influence of assets and liabilities. Paper presented at the 7th Conference of the International Society of Quality-of-Life Studies, July, Grahamstown, South Africa.Google Scholar