Examining the Relationship Between Different Dimensions of Subjective Well-being and Savings Behaviour: Insights From UK Panel Data

Abstract

This paper examines the relationship between different dimensions of subjective well-being and savings behaviour. A conceptual framework based on Van Praag et al.’s (2003) two-layer model of well-being was empirically tested to investigate relationships among general life satisfaction, domain-specific satisfaction (health, income, leisure time, and job), and various measures of savings behaviour. Using panel data from the Understanding Society Survey covering British households between 2010 and 2018, this research determined that while general satisfaction positively correlates with savings behaviour, different satisfaction domains show varying relationships. Income and job satisfaction demonstrate positive associations with savings behaviour, whereas health and leisure time satisfaction show negative correlations. The core relationships remain stable even when the analysis is extended to include the non-linear effect of health satisfaction or the COVID-19 period, suggesting persistent patterns in how different aspects of well-being relate to financial decision-making. These findings suggest that approaches to understanding savings behaviour might benefit from considering multiple dimensions of well-being rather than relying on unified measures of general satisfaction.