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Consumption and Subjective Wellbeing: Exploring Basic Needs, Social Comparison, Social Integration and Hedonism in Peru

Abstract

Within material poverty contexts, consumption and subjective wellbeing are positively and strongly related. This is usually explained in terms of the increased possibilities to satisfy basic needs that additional spending provides. Other important aspects of consumption, such as its relative, symbolic and hedonic dimensions are not generally considered. The current study explores these aspects in seven poor Peruvian communities through expenditure and motives using regression analysis. Motives for consumption are included in the model drawing on psychologists’ research into the importance of accounting for motives when assessing the impact of material goals on subjective wellbeing. Results reveal that in the Peruvian corridor, consumption has a meaning beyond mere basic needs satisfaction. Status concerns, the reference group, the pleasure of consuming, providing for the household basics and the expectation of escaping social marginalisation are aspects of consumption significantly predicting people’s happiness.

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Notes

  1. 1.

    Refer to http://www.welldev.org.uk for a detailed description of the research instruments.

  2. 2.

    The survey had three rounds. This research uses only data from the first round.

  3. 3.

    The question was: ‘Taking all things together, how would you say things are these days? Would you say you are very happy, fairly happy or not too happy? This question had already been used in the RANQ and in a previous psychometric instrument developed by the WeD Peruvian team. Therefore issues about the meaning of happiness for people of the Peruvian corridor and the translation of the concept to Quechua had all been cleared before the implementation of the I&E survey.

  4. 4.

    At 15 July 2005 1 Peruvian Nuevo sol equalled 0.25451 Euro. (http://www.oanda.com/convert/classic)

  5. 5.

    The use of adult equivalence scales is not unproblematic but it is applied here as it represents the diverse consumption requirements of different age and gender groups (see White and Masset 2006 for a methodological discussion).

  6. 6.

    Refer to Guillén-Royo (2007) for a discussion on the validity and reliability of an open-ended question on motives for consumption.

  7. 7.

    See Guillén-Royo (op. cit.) for a detailed account of the coding and labelling of the motive variables.

  8. 8.

    In this paper motives are treated as independent variables capturing local meanings of consumption. They do not depend on absolute expenditure (or vice-versa) as they were enquired in connection with people’s priorities of consumption not with regards to current expenditure. Moreover, the open-ended nature of the motives question implies that one cannot disentangle motives from goals in the given answers. Thus, a causal relationship between motives and consumption is not hypothesised here.

  9. 9.

    This accords with Cummings (1995) review of studies from developing countries and is consistent with what has been found in other WeD countries. For instance, using RANQ data, Thailand (43%) and Ethiopia (42%) show even lower percentages SM.

  10. 10.

    In this paper the analysis is done with cross-sectional data from the first round of the WeD I&E survey. However, three rounds of the survey were available with information on happiness and expenditure. Drawing on data from the three periods, a Hausman test was run to test for endogeneity in expenditure yielding non-significant results.

  11. 11.

    This is a common finding in happiness studies where the young and the old seem to be happier than the middle-aged (Frey and Stutzer 2002 p. 54). Those findings vary with regard to the econometric methods used and the cardinality or ordinality of the dependent variable (Ferrer-i-Carbonell and Frijters 2004).

  12. 12.

    The type of site dummy is dropped in models 1.b. and 1.c. to avoid multicollinearity since average expenditure is calculated at the rural, peri-urban and urban level.

  13. 13.

    Ordinal variables were created assigning weights (from 5 to 1) to each motive in descending order from the highest to the lowest ranked by the participant. This followed Clark’s (2002) approach to the study of the importance of income and wealth and the reasons to value them in South Africa. Formally: Let us call Mj motives for consumption where (j = 1, 2, 3) and j = 1 = providing the household ‘basics’; j = 2 = hedonism; j = 3 = social interaction

    Participants in the I&E survey (i = 1…399) declare up to five priorities and motives for consumption and they rank them (z = 1…5). For each rank it is assumed a score Sz from 1 to 5 where S 1 = 5; S 2 = 4; S 3 = 3; S 4 = 2 and S 5 = 1. From individuals’ responses an index (M ij ) of the relevance of motive (j) for individual (i) is defined as follows: \( M_{{ij}} = {\sum\limits_{z = 1}^5 {S_{z} * m_{{z,j}} } }, \) where \( m_{{z,j}} \) = 1 if motive j occurs in position z; \( m_{{z,j}} \) = 0 otherwise

    For each individual we can, therefore, generate a vector of motives for consumption VM i where VM i  = (\( M_{{i,1}} ;\) \( M_{{i,2}} ;\) \( M_{{i,3}} \)

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Acknowledgements

The support of the UK Economic and Social Research Council (ESRC) is gratefully acknowledged. The work has partially drawn on data from the Programme of the ESRC Research Group on Wellbeing in Developing Countries at the University of Bath and was undertaken as part of the ESRC Post-doctoral Fellowship awarded to the author. I am indebted to the Centre for Development and the Environment at the University of Oslo for offering me the opportunity to develop my research in a multi-disciplinary environment. I am particularly grateful to an anonymous referee for the very useful comments on earlier drafts of this paper. Finally, I would further like to thank Ian Gough and Tim Kasser for their constructive and helpful remarks.

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Correspondence to Monica Guillen-Royo.

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Guillen-Royo, M. Consumption and Subjective Wellbeing: Exploring Basic Needs, Social Comparison, Social Integration and Hedonism in Peru. Soc Indic Res 89, 535–555 (2008). https://doi.org/10.1007/s11205-008-9248-1

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Keywords

  • Consumption
  • Subjective wellbeing (SWB)
  • Happiness
  • Expenditure
  • Motives
  • Basic needs
  • Social integration
  • Peru