Income, Consumption, and Subjective Well-Being: Toward a Composite Macromarketing Model

This article reviews, critiques, and integrates three psychological perspectives on the relationship between wealth and subjective well-being. First, the comparative perspective holds that life satisfaction results from a comparison of one's own financial position to that of some reference group or material norm. Second, the goal attainment perspective looks at money as a potential source of well-being by enabling people to attain goals they set. Finally, the hedonic perspective looks at how money leads to well-being by enabling people to use their time in more satisfying ways. In addition to providing a critical analysis, this article integrates these three perspectives into a single composite model. This model explains the mechanisms linking income and other material resources with the cognitive and affective elements of subjective well-being. The model also clarifies why income has only a modest relationship to subjective well-being.