Overall life satisfaction: Satisfaction with family life and health are the strongest predictors while satisfaction with income and leisure time are the weakest predictors

Happiness, domains of life satisfaction, perceptions, and valuation differences across genders. Stefani Milovanska-Farrington, Stephen Farrington. Acta Psychologica, Volume 230, October 2022, 103720. https://doi.org/10.1016/j.actpsy.2022.103720

Highlights

• Using German panel data, we examine the association between satisfaction with domains of life, values, and relative perceptions and overall subjective well-being. We also explore valuation differences between men and women.

• The findings suggest that perceived satisfaction with different domains of life has a significant impact on overall life satisfaction.

• We also find that how happy people believe they are with different life aspects is a stronger determinant of their overall life satisfaction than their actual circumstances.

• Family and health satisfaction consistently matter the most for overall life satisfaction while financial satisfaction is least important for both women and men in almost all specifications. We also find gender differences in values.

• Family and health satisfaction matter the most for overall well-being of both men and women. However, men exhibit higher valuation of work satisfaction than women, whereas women value their partner's happiness more than men.

Abstract: Happiness is strongly correlated with goal attainment, productivity, mental health and suicidal risk. This paper examines the association between satisfaction with areas of life and overall life satisfaction, the importance of relative perceptions compared to absolute measures in predicting overall life satisfaction, and differences in the domains of life which are the most strongly related to overall life satisfaction of men and women. The findings suggest that relative perceptions have a large statistically significant association with SWB. Satisfaction with family life and health are the strongest predictors while satisfaction with income and leisure time are the weakest predictors of overall life satisfaction for both genders. Work satisfaction is more important for men than for women, whereas partner's happiness is more valued by female respondents. Satisfaction with household compared to personal income has a larger association with life satisfaction in all subsamples except employed women. Understanding the perceived and factual determinants of happiness has urgent implications discussed in the article.

Keywords: Subjective well-beingSatisfaction with areas of lifePerceptionsValuesGender differences

6. Discussion and implications

In this section, we provide some potential explanations of our finding that perceptions are a better predictor of happiness than variables reflecting actual circumstances, and explore implications of the study.

First, individuals' satisfaction is a function of their target, a notion known as the aspiration theory, or multiple discrepancies theory, in psychology. It suggests that individuals are not able or willing to make absolute judgements. They form aspirations by comparing themselves to the past, expected future or the surrounding environment, and evaluate outcomes based on the discrepancies between their aspired goals and current circumstances (Stutzer and Henne, 2014). Therefore happiness depends on the gap between aspiration and achievement rather than the achievement itself (Michalos 1991). For example, Stutzer (2004) finds a negative correlation between a larger gap between aspiration and income, and happiness. Similarly, happiness depends on people's reference group. Literature has found a negative relationship between happiness, and income (Clark and Oswald, 1996; McBride, 2001; Guilbert and Paul, 2009) and education of the comparison group (Nikolaev, 2016). If this is true, social comparisons, aspiration and gaps between goals and achievements explain why personal interpretation of the facts has a greater association with overall life satisfaction as compared to the true state of reality.

Second, our results are consistent with the findings in the psychology literature that individuals' behavior depends on what they believe the external environment is rather than what it actually is. Psychology explains discrepancies between perceived and actual circumstances by bounded rationality and cognitive biases, including confirmation (i.e., interpreting facts to match prior beliefs, judgement and choices), anchoring (i.e., judging based on initial information), randomness (i.e., attributing value to irrelevant experiences) and availability (i.e., judging based on readily available information which does not necessarily accurately reflect reality) biases. In addition, genetic factors are found to explain about 44–52 % percent of the variation in SWB (Lykken and Tellegen, 1996).

Third, Easterlin's (1974) paradox suggests that our current economic system might be sacrificing human well-being in exchange for GDP per capita growth. The dominance of relative perception over objective level of consumption as determinants of happiness, if externally valid outside of the German panel data analyzed here, would provide an acceptable solution to the puzzle that Easterlin observed.

It may be the case that only rapid economic growth would allow for individuals to notice the increased quality of life in a meaningful way. If so, we would expect to see increased levels of happiness only during periods of extremely rapid economic growth where people have a reference point within their own memory of less abundant times. Regarding the second industrial revolution, Keynes (1919) writes: “What an extraordinary episode in the economic progress of man that age was which came to an end in August 1914! The greater part of the population, it is true, worked hard and lived at a low standard of comfort, yet were, to all appearances, reasonably contented with this lot.” The almost overnight transition from iron to steel of the Second Industrial Revolution and the subsequent falling consumer prices could have provided such a time period where quality of life improved fast enough for people to perceive the difference and to derive happiness from their perceptions.

It may also be the case that cultural values play a much larger role in mitigating unhappiness from relative income dissatisfaction. Cultures which promote happiness through relative perceptions might employ devices to alter those perceptions. Mealtime prayers often included reminders of gratitude, and the first links between gratitude, economics, and psychology are starting to be recognized (Desteno et al., 2014). Also, depending on the version, 20 % to 30 % of the ten commandments contain prohibitions against covetousness which is shown by Milfont and Gouveia (2009) to negatively affect SWB. Alternatively, cultures which do not succeed in mitigating unhappiness from relative income dissatisfaction might glamorize conspicuous consumption (Veblen, 1899) such as the social media phenomenon of the “Instagram model” which could be a major cause of the current mental health crisis in the US through the vector of unhappiness. It also potentially sheds some light on the historical pejorative “nuveau riche” as wealthy members of stable societies may have benefited from avoiding ostentatious displays and harbored animosity toward people who through conspicuous consumption fostered unhappiness in lower income individuals thereby destabilizing society. This is a fruitful area for future research, but the dominance of perception over objective state takes the enigma out of Easterlin's puzzle.

Because of the relationship between happiness, and health, productivity and goals attainment, understanding its determinants is important for predicting individual and social outcomes. More importantly, the recent social isolation, uncertainty about the future, health and financial concerns have led to a decline in the ratings of life satisfaction, deterioration of individuals' mental health, increased stress and worry rates, rising number of people experiencing symptoms of depression, and elevated suicidal rates (Witters and Harter, 2020). An insight into the gender differences in the factors which generate greater life satisfaction is useful in predicting the impact of the pandemic on different groups of people, identifying those at greatest risk, and developing a plan for prevention of the forementioned adverse effects. Specifically, public awareness of the finding that self-perceived factors have a larger impact on SWB as compared to actual current circumstances is likely to incentivize people to put effort in viewing reality differently and realizing their happiness with alternative aspects of life. This can increase their level of overall happiness, and thus prevent mental disorders, long-term diseases and suicidal risk.

Furthermore, our finding that satisfaction with family life and health has a larger association with happiness relative to satisfaction with income has implications related to the direction of efforts of decision-makers. Our results suggest that their efforts might have a larger positive impact on societal well-being if directed toward ensuring improvement of health outcomes through prevention of further spread of viruses and assistance provided to infected people and those in high risk groups, and emphasizing the importance of strong family support and close attention to family life, rather than increasing the financial well-being of the population.