Seniors Across Europe: The value of the car is, among all wealth components (houses, bank account, bonds, stocks, mutual funds, debts and mortgages), the form of wealth most related to life satisfaction

The Rolling 50s (and More): Cars and Life Satisfaction Among Seniors Across Europe. Gaël Brulé, Laura Ravazzini & Christian Suter. Applied Research in Quality of Life, November 24 2020. https://rd.springer.com/article/10.1007/s11482-020-09887-2

Rolf Degen's take: https://twitter.com/DegenRolf/status/1331485360661073921

Abstract: Cars represent a valuable real asset that most individuals use on a daily basis. Although cars are a form of material prosperity like income and other forms of wealth, the link between cars and subjective well-being (SWB) is barely covered in the existing literature. Furthermore, few existing contributions are scattered across specific cultural contexts. Here, we analyze the relationship between cars and the SWB of seniors in different European countries using the SHARE dataset. We construct multilevel and fixed-effect models to explore the extent of economic, infrastructural, and cultural factors and how they can explain this relationship. The results show that the value of the car is, among all wealth components (houses, bank account, bonds, stocks, mutual funds, debts and mortgages), the form of wealth most related to life satisfaction. In addition, cars matter less (a) in affluent societies, (b) where rail infrastructure is more developed, and (c) where people hold fewer materialistic values. We discuss these results in the framework of the functional and positional value of cars, i.e., respectively, the value derived from it regardless of others and the value derived from it vis-à-vis others.

Discussion

We found that cars have a significant and positive influence on the happiness of seniors in Europe. Their contribution is higher than housing wealth, money available for current expenditures, and other financial assets. This relationship between cars and SWB is observable in every European nation at different intensities. Differences across countries are linked to economic, infrastructural, and cultural factors. The relationship is also observed in longitudinal models. This increase is moderated by the level of affluence of the country: If there is economic growth, then an increase in car value becomes less important for SWB.

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The Influence of the Context on the Relation Between Cars and SWB

One of the main findings of this paper is that the influence of cars matters more in less affluent countries although the relation is far from being systematic. Although seniors in countries such as Denmark enjoy having a more expensive car, they do so to a lesser extent than seniors in less affluent countries such as Greece. Part of this can be explained by the quality of infrastructures especially train infrastructure. Cars matter less in places where train infrastructures are better. Besides economic and infrastructural reasons, one can also see that values have an influence on the car-SWB relation. In countries where material possessions are more valued, owning an expensive car brings more happiness. Once introduced, the interaction term between importance of being successful and car value as well as the interaction term between importance of being rich and car value make the car-SWB relation insignificant. This also means part of the relation is carried out by values.

Contrary to the contribution of Okulicz-Kozaryn et al. (2015) in the USA, it seems that in Europe, having a more expensive car than an average frugal car is influential for seniors’ SWB. However, there is a difference between the two studies in the population studied; Okulicz-Kozaryn et al. (2015) observed the entire population while we only examined seniors. Materialistic values are more prominent among older generations (Inglehart 2008); this is likely to have an influence. Furthermore, public transportation is more developed in Europe than in the USA, and the effect of cars in Europe is probably more positional because the functional value can be derived by other means of transportation.

Functional Value or Positional Value

Hirsch (1976) distinguishes the functional value from the positional value of goods in general. We defined the functional value of cars as a driving unit and the positional value as anything that would come on top. Thus defined, this means that households owning a car can benefit from the functional value of the car, and the positional value is represented by the relative value of the car. In this case, a more expensive car has a higher positional value than a cheaper one independent of the type of car other people own. Our analysis shows that both the functional and positional values of a car have independent and additive effects on the life satisfaction of seniors. Individuals benefit from having a car, and more expensive cars bring more satisfaction. Here, there are two ways in which we operationalized the positional value of cars: (1) by looking at the national average car value and 2) by looking at the top 25% of car value in each country. These values are considered to be average and do not include the individual passion for driving that some people would consider as pleasure and is not necessarily positional. Furthermore, functional and positional values might not be fixed concepts; functional and positional value could evolve with economic growth or technological evolutions. What used to once be considered functional and positional values might become simply functional after some time once the item is considered to be “normal” (e.g., air conditioning in European countries).