Real Assets and Subjective Well-Being: Using a Novel Measure for Relative Effects

Abstract This paper examines the relationship between household real assets and life satisfaction in Slovakia, using microdata from the 2017 wave of the Household Finance and Consumption Survey (HFCS). We find a robust positive association between the value of real assets and life satisfaction. To assess whether this relationship is driven by relative, rather than purely absolute, effects, we make use of a unique feature of the Slovak HFCS: interviewer paradata. Specifically, we use interviewers’ assessments of the respondent’s dwelling quality relative to that of nearby homes. These paradata provide a new locally grounded reference point for evaluating positional effects – arguably with greater validity than conventional approaches based on arbitrarily defined comparison groups. We show that real assets function as positional goods, with downward comparisons exerting a stronger influence on well-being than upward ones. We estimate that approximately 7% of the total relationship between real assets and life satisfaction can be attributed to relative concerns.