The Effect of Consumer Confidence and Subjective Well-being on Consumers’ Spending Behavior

Abstract

The paper focuses on the role of consumer confidence and selected well-being measures in aggregate consumption and in subsets of aggregate consumption on a broad set of 22 OECD countries. Consumer confidence played a positive and statistically significant role in the development of expenditures especially on durable and semi-durable goods and services. The increase in cognitive, affective and eudaimonic measures of well-being, measured by the Cantril ladder, positive and negative affect and freedom to make life choices variables, had negative impact on total consumption and expenditures on semi-durable goods and services. Possible explanations for these estimates are provided in the paper. Based on the purpose of expenditure, consumer confidence was a significant determinant of all expenditures except for unavoidable spending such as food, health, housing, water, energy, and fuel. The subjective well-being indicators showed a negative impact on expenditures on clothing and footwear, recreation and culture, and restaurants and hotels. Possible explanations for the positive and negative effects of subjective well-being measures on consumption, benefits of including the freedom of choice variable, and directions for future research regarding the introduction of understudied variables are discussed.

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“…Our research direction was very similar and the findings confirm the points stated below. Supplementary Table S4 and global research have shown that some areas need to be explored more, such as better gender equality 69 , corruption 70 reduction, emphasis on human development 71 , advances in democracy 72 , and happiness 73 . Such research emphasizes social 74 , 75 and cultural 76 , 77 factors, as well as supporting our regression and MCDM analysis results, which prove our first hypothesis that improvements in climate change indicators and mitigation, adaptation, and resilience actions can be achieved for countries and cities considered without sticking just to environmental, economic, and other traditional means (Supplementary Table S4 ).…”

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Analyzing GDP Growth Drivers in Saudi Arabia: Investment or Consumption: An Evidence-Based ARDL Bound Test Approach

“…Consumer confidence, fueled by economic stability, serves as a driving force behind this phenomenon. Notably, it plays a significant and positive role in stimulating expenditures, particularly for durable and semidurable goods as well as services, as highlighted by [39]. Furthermore, embracing positive uncertainty can facilitate the integration of novel types of goods and services, paving the way for implementing innovative ideas, capabilities, and skills.…”