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Living in the Shadow of the Past: Financial Profiles and Well‐Being

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  • Andrew E. Clark
  • Conchita D'Ambrosio
  • Rong Zhu
Abstract
We consider the link between individual financial profiles over time and well‐being, as measured by life satisfaction. In particular, we look at annual self‐reported financial worsening and improvement information for more than 25,000 individuals in Australian panel data from 2002 to 2017. We first find that satisfaction falls (rises) with a contemporaneous major financial worsening (improvement), with the largest correlation seen to be with financial worsening. Second, the experience of these financial events in the past continues to be linked to current well‐being. Last, only the order of financial‐improvement spells relates to well‐being: a given number of past years where finances deteriorated has the same association with current well‐being whether the deterioration occurred in one continuous spell or was interrupted. We show that these associations are heterogeneous over the distribution of well‐being.

Suggested Citation

  • Andrew E. Clark & Conchita D'Ambrosio & Rong Zhu, 2021. "Living in the Shadow of the Past: Financial Profiles and Well‐Being," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(3), pages 910-939, July.
    • Handle: RePEc:bla:scandj:v:123:y:2021:i:3:p:910-939
    DOI: 10.1111/sjoe.12426
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    Cited by:

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    2. Luo, Jianbo, 2021. "Happiness adaptation to high income: Evidence from German panel data," Economics Letters, Elsevier, vol. 206(C).
    3. David W. Johnston & Olena Stavrunova, 2021. "Subjective Wellbeing Dynamics," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(4), pages 518-529, December.
    4. Nicole Black & Angela Jackson & David W. Johnston, 2022. "Whose mental health declines during economic downturns?," Health Economics, John Wiley & Sons, Ltd., vol. 31(1), pages 250-257, January.
    5. Maite Blázquez & Ana I. Moro Egido, 2020. "Financial insecurity and subjective well-being. Europe in crossnational perspective," ThE Papers 20/07, Department of Economic Theory and Economic History of the University of Granada..
    6. Thi Thao Nguyen & Kim Huong Nguyen & Nicholas Rohde, 2024. "Economic Disparities, Life Events, and the Gender Mental Health Gap," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 174(3), pages 1053-1100, September.

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