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How your bank balance buys happiness: The importance of "cash on hand" to life satisfaction

Ruberton, PM; Gladstone, J; Lyubomirsky, S; (2016) How your bank balance buys happiness: The importance of "cash on hand" to life satisfaction. Emotion , 16 (5) pp. 575-580. 10.1037/emo0000184. Green open access

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Abstract

Could liquid wealth, or "cash on hand"—the balance of one's checking and savings accounts—be a better predictor of life satisfaction than income? In a field study using 585 U.K. bank customers, we paired individual Satisfaction With Life Scale responses with anonymized account data held by the bank, including the full account balances for each respondent. Individuals with higher liquid wealth were found to have more positive perceptions of their financial well-being, which, in turn, predicted higher life satisfaction, suggesting that liquid wealth is indirectly associated with life satisfaction. This effect persisted after accounting for multiple controls, including investments, total spending, and indebtedness (which predicted financial well-being) and demographics (which predicted life satisfaction). Our results suggest that having readily accessible sources of cash is of unique importance to life satisfaction, above and beyond raw earnings, investments, or indebtedness. Therefore, to improve the well-being of citizens, policymakers should focus not just on boosting incomes but also on increasing people’s immediate access to money.

Type: Article
Title: How your bank balance buys happiness: The importance of "cash on hand" to life satisfaction
Open access status: An open access version is available from UCL Discovery
DOI: 10.1037/emo0000184
Publisher version: http://dx.doi.org/10.1037/emo0000184
Language: English
Additional information: Copyright © 2016 American Psychological Association. All rights reserved. This article may not exactly replicate the authoritative document published in the APA journal. It is not the copy of record.
Keywords: life satisfaction, well-being, economic psychology, happiness
UCL classification: UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management
URI: http://discovery.ucl.ac.uk/id/eprint/1519781
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