Paul Thompson* and Victor Dulewicz
This study explores the effect of the financial crisis on the consumer and its impact on psychological well-being and life satisfaction with the core question investigating what effect the financial crisis has on the psychological well-being and life satisfaction of house hold heads in the United Kingdom. The reversed model approach used in the study analysed from two perspectives before and after the financial crisis. One is to investigate the psychological well-being using the general health questionnaire and its effect on health, life satisfaction and financial incapability. The second is to investigate financial incapability and its effect on health, life satisfaction and psychological well-being based on the British Household Panel (1991-2009) and Understanding Society (2010) Surveys.
They are two integrated large nationwide panel surveys commissioned by the United Kingdom government as an instrument to measure social and economic indicators at the individual and household level. The result of the analysis indicates that overall life satisfaction and financial incapability are important determinants of psychological well-being. The paper further explores the impact of the financial crisis on a household head before and after the crash. The results suggest that satisfaction with life, health implications, psychological well-being, and financial capability were significantly lower after the financial crisis. In conclusion, the results explain why overall life satisfaction generally affects individuals’ psychological wellbeing and financial capability, and why those with high financial incapability have poor psychological well-being.
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