International Review of Economics

, Volume 57, Issue 2, pp 163–176

Does consumption buy happiness? Evidence from the United States

Article

Abstract

We examine the association between various components of consumption expenditure and happiness in the Health and Retirement Study (HRS), a nationally representative sample of older Americans. We find that only one component of consumption is positively related to happiness—leisure consumption. In contrast, consumption of durables, charity, personal care, food, health care, vehicles, and housing are not significantly associated with happiness. Second, we find that leisure consumption is associated with higher levels of happiness partially through its effect on social connectedness, as indexed by measures of loneliness and embeddedness in social networks. On one hand, these results counter the conventional wisdom that “material goods can’t buy happiness.” One the other hand, they underscore the importance of social goods and social connectedness in the production of happiness.

Keywords

Happiness Leisure Consumption 

JEL Classification

D12 I31 

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Copyright information

© Springer-Verlag 2010

Authors and Affiliations

  1. 1.University of Wisconsin-MadisonMadisonUSA
  2. 2.IZABonnGermany
  3. 3.National Bureau of Economic ResearchCambridgeUSA
  4. 4.University of ChicagoChicagoUSA

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