Attachment to Material Goods and Subjective Well-Being: Evidence from Life Satisfaction in Rural Areas in Vietnam

Abstract

In our daily lives, some people tend to use the same material goods more extensively than other people. It would appear that people like this consume fewer material inputs, other things being equal. Our research question is whether they are also happier in terms of life satisfaction. To study this, we first hypothesized that they are happier due to the endowment effect, prosocial or pro-environmental motivations, or income and substitution effects. We show that income and substitution effects are positive for people who use products for longer. Using a reduced form model that incorporates these four effects together, and empirical data originally collected from rural areas in Vietnam, we divide consumption into material consumption and residual consumption and demonstrate that, in general, increased material consumption is not associated with increased well-being; however, for those who take better care of their possessions, this effect is reversed, and material consumption does increase well-being. Our study shows that for people who take better care of their possessions, increased consumption is linked to increased well-being. This finding has a useful policy implication for developing countries to improve their well-being by promoting economic growth alongside responsible consumption.