Essays on the Relationship Between Income and Life Satisfaction in the United States

Abstract

This dissertation presents three essays concerning the relationship between income and life satisfaction in the United States. The first essay examines whether the receipt of income assistance from public and private sources predicts life satisfaction. It identifies a negative association between the receipt of income assistance from government and private sources and life satisfaction, and finds that the association remains significant even after controlling for family income and other factors. The negative association between the receipt of income assistance and life satisfaction continues to exist across most of the income distribution, although the correlation is more uncertain for respondents in the very lowest income quartile. Another noteworthy finding from this essay is that income assistance from non-governmental sources is just as predictive of lower life satisfaction scores as is assistance from government means-tested welfare programs The second essay examines whether consumption is a better predictor of life satisfaction than is income. The essay finds that income and consumption are both predictors of life satisfaction, but that several other factors are even more predictive of well-being. In the full regression models health, marriage, and unemployment are much more predictive of life satisfaction than either income or consumption. The third essay examines the link between childhood family incomes and future life satisfaction. To analyze this topic, longitudinal data from the PSID is used to obtain mean family incomes when people were ages 13 to 17 between 1968 and 1994 and examines the life satisfaction of these individuals as adults in 2011. The primary finding from this essay is that the family incomes of youths are not strongly predictive of their future life satisfaction scores.