Aurora Murgea Robert D. Reisz

Does the Market Make us Happy? The Stock Market and Well-being

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In the last decades, a growing body of literature was dedicated to the analysis of the determinants of well-being. Despite that, the relation between well-being and capital markets has never been investigated, presumably due to the scarcity of subjective well-being time series. The present paper tries to fill this gap explaining why the capital market evolution has an impact on subjective well-being and investigating the relationship between well-being and the stock market in the USA. Empirical tests, using the Gallupp Healthways Well-being Index, Standard & Poor's S&P 500 and the VIX volatility index show a strong and statistically significant impact of the stock market on well-being. The channels of influence are both monetary, through the income influence, and psychological due to the increase in uncertainty associated with the growing financial fragility and instability. These findings show that pursuing financial stability should be a priority in the agenda of policymakers in order to achieve both economic development and individual well-being.


  • J.E.L. D60
  • D53
  • G10
  • I31


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