“Havin’ Money’s Not Everything, Not Havin’ It Is”: The Importance of Financial Satisfaction for Life Satisfaction in Financially Stressed Households

In the official version of the “Good Life,” the relevant line reads “Having' money's the everything that having' it is.” Lyrics © EMI Music Publishing, Sony/ATV Music Publishing LLC, Warner/Chappell Music, Inc, Universal Music Publishing Group. Songwriters: Kanye West, Aldrin Davis, James Ingram, Quincy Jones, Michael Dean, John Stephens, Faheem Najm.

Confounding the disputed conceptual relationship is the considerable ambiguity in the meanings of the constructs being measured. This may be due in part to the challenge presented by the multi-disciplinary nature of this research where researchers in one discipline adopt vocabulary that bumps up against discipline-specific conventions in another. For example, where economists would make a clear and consistent distinction between income (as revenue per period of time that excludes debt) and wealth (as the stock of assets net of liabilities which can generate income but is valued independently of time and accounts for debt), psychologists may not.

It is worth recalling here that respondents reporting high non-financial stress as their primary source of stress may be experiencing financial stress as well.

The income information included in the 2005 and 2010 surveys is rudimentary; we have access to nominal household income brackets only and so opt to employ dummy variables in our analysis. Since we are not working with a continuous variable, we cannot use a price index to simply deflate 2010 nominal values into constant 2005 dollars, e.g., to obtain a single, consistent, continuous income variable. Choosing income bracket mid-points as a proxy for a continuous income variable is complicated by the fact that we are using 2 years of data, 5 years apart. As such, the middle of an income bracket in 1 year of data will not equal the middle of the same nominal income bracket in the second year of data. Instead, for each survey year we create dummy variables that indicate if a household nominal income falls below twenty thousand dollars or above one hundred thousand dollars.