Mental Accounts: How Our Perception of Assets and Debt Affects Happiness

Date
2011
Journal Title
Journal ISSN
Volume Title
Publisher
Producer
Director
Performer
Choreographer
Costume Designer
Music
Videographer
Lighting Designer
Set Designer
Crew Member
Funder
Rehearsal Director
Concert Coordinator
Moderator
Panelist
Alternative Title
Department
Haverford College. Department of Economics
Type
Thesis
Original Format
Running Time
File Format
Place of Publication
Date Span
Copyright Date
Award
Language
eng
Note
Table of Contents
Terms of Use
Rights Holder
Access Restrictions
Open Access
Tripod URL
Identifier
Abstract
This paper investigates the validity of ‘mental accounting,’ specifically by determining whether individuals view an additional dollar in total household assets as a dollar less in total household debt. Furthermore, the analysis in this paper focuses on how an individual’s perception of this assets-debt relationship affects their subjective well-being, i.e. their happiness. This paper uses findings from previous studies to attempt to create a multivariable regression that will determine the nature of this relationship, controlling for other factors and isolating the sample size to those individuals who are the equivalents of household heads. In this analysis, the results demonstrate that the asset-debt relationship does not hold, supporting the theoretical background of mental framing in its explanation of how individuals view their assets and debt differently. The analysis also examines the difference in the assets-debt relationship with happiness between males and females, finding it unlikely to be different for assets, debt and household disposable income for males and females in the sample. The statistical and economic significance of physical health on subjective well-being, as well as the quadratic relationship between age and subjective well-being (as found in previous studies), is also explored in this analysis.
Description
Citation
Collections