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The demand for relational goods: empirical evidence from the European Social Survey

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Abstract

How are happiness and the demand for relational goods and status goods related? Using cross-sectional data from the European Social Survey, this relationship is investigated for European countries. The main result is that the demand for relational goods is not reduced by high opportunity costs of time. Rather, both wage rate and income are positively related to the frequency of social contacts. In contrast to financial means, while status is more important for happiness in richer European countries than in poorer ones, social status is not decisive for the frequency of meeting friends regardless of the home country’s economic well-being. Thus, while no crowding out of relational contacts by status could be observed, relational goods are even boosted by material well-being.

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Notes

  1. The case of relational bads (see, e.g. Sugden 2005, p. 68) is excluded from the analysis.

  2. Though it is mostly not the effect of fewer social contacts but marital status and trust in institutions that is responsible for this decline (Bartolini et al. 2008).

  3. In contrast, Sarracino (forthcoming) does not include relational goods when investigating the possible decline of social capital in European countries.

  4. “Taking all things together, how happy would you say you are?”.

  5. “All things considered, how satisfied are you with your life as a whole nowadays?”.

  6. “Using this card, how often do you meet socially with friends, relatives or work colleagues?” [original emphasis. Explanation in the ESS—questionnaire: “‘Meet socially’ implies meet by choice rather than for reasons or either work or pure duty.”].

  7. The categories are: 1 = “never”, 2 = “less than once a month”, 3 = “once a month”, 4 = “several times a month”, 5 = “once a week”, 6 = “several times a week”, 7 = “every day”.

  8. In the remainder of the article, the estimation equations are not shown because their structures are very similar concerning control and dummy variables.

  9. Odds ratios are calculated by taking the natural exponent of the coefficient. Another possibility to construe the result from our ordered logit approach is to interpret the quasi-elasticities of the dependent variables; see Franses and Paap 2001, 117 f.

  10. Excluded from the study have been observations which gave a work time of over 100 h a week per individual. These seem either to be coding errors or raise at least the suspicion that the answers are incorrect.

  11. Remarks: The OLS estimation yields a statistical significance of WKHTOTCUT at 1% level. The ordered logit estimation using HAPPY as dependent variable deviates insofar as WKHTOTCUT is not statistically significant at 10% level.

  12. This finding hints in the same direction as Bruni and Stanca (2008) who found empirical support for a negative empirical association between TV consumption and relational goods in the WVS. For the (negative) relationship between TV consumption and life satisfaction, see Bruni and Stanca (2006) as well as Frey et al. (2007) and Frey (2008), Chap. 9.

    Remarks: The respective OLS estimation yield a statistical significance of TVTOTHOUR at the 10% level.

  13. Remarks: In the alternative OLS estimation the coefficient of STATUSLOW is statically significant at the 5% level.

  14. When estimating the ordinary least squares for rich countries STATUSLOW is statistically significant at 1% level and STATUSHIGH has reversed signs. When estimating HAPPY as dependent variable, STATUSLOW is statistically insignificant.

  15. See Becchetti et al. (2009, p. 2) for further references. These authors confirm that the causality runs from relational goods and happiness.

  16. Whether this ensues from a direct effect (watching TV results in less available spare time) or an indirect effect (watching TV increases the concentration on material goods) (cf. Bruni and Stanca 2006, 2008) is not within the focus of this study.

  17. This does not refute the fellow feelings hypothesis as perhaps the problem of coordination failure as observed by Becchetti et al. (2006) is not as big in European countries.

  18. There are different possibilities to measure opportunity costs of time, of course, e.g., Frey et al. (2007, p. 296) discriminate individuals along high and low opportunity costs of time (i) according to their flexibility to transfer time between work and leisure and (ii) whether individuals are unemployed/retired or working.

  19. Sarracino (2008, p. 470) finds no statistical significant results for this relationship in his analysis.

  20. Measuring the consumption of status goods directly, e.g. the membership in clubs like golfing or yachting clubs or the purchase of certain brands of cars, could be a better indicator.

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Acknowledgements

I would like to thank an anonymous referee as well as the participants of the HEIRS conference on happiness and relational goods, Isola di San Servolo, Venezia, 11–13 June 2009, and especially Elena Giachin Ricca, for useful comments on a previous version of this paper. However, the responsibility for all remaining errors and shortcomings is mine.

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  1. Institute of Public Economics, University of Muenster, Wilmergasse 6-8, 48143, Muenster, Germany

    Björn Bünger

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Bünger, B. The demand for relational goods: empirical evidence from the European Social Survey. Int Rev Econ 57, 177–198 (2010). https://doi.org/10.1007/s12232-010-0094-5

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