Life satisfaction and the consumption values of partners and friends: Empirical evidence from German panel survey data

Abstract

This empirical research note uses a large-scale household panel survey for Germany to assess the consumption values of partners and friends. For this purpose, reported individual life satisfaction (as proxy for utility) is regressed on being in a partnership, on the number of friends, on the net household income, and on other covariates. The results of pooled and fixed effects regressions indicate sizeable consumption values for partnerships and friends of several ten thousands Euros per year in terms of net household income. The estimated consumption values are significantly smaller when taking non-linearity (decreasing marginal utility) of household income into account.