Does urbanization matter in the expenditure-happiness nexus?

Abstract

This study aims to improve the regional well-being literature on the so-called “reversal issue” of the expenditure-happiness nexus, accounting for two main sources of heterogeneity: degree of urbanization and individual spending habits. Moreover, we investigate the role of happiness across the entire expenditure distribution using a quantile modelling approach. The results show that satisfaction has a positive, significant and non-linear effect on total expenditure across different urbanization categories. To better investigate the multidimensional nature of happiness, analysis of the nexus is expounded to different satisfaction domains and related spending aggregates offering a comprehensive and complex behavioural profile of individuals.