This dissertation combines three contributions to the literature on the determinants of well-being and the social nature of preferences. Departures from self-centred, consumption-oriented decision making are increasingly common in economic theory and are empirically well motivated by a wide range of behavioural data from experiments, surveys, and econometric inference. The first two contributions are focused on the idea that reference levels set by others’ consumption may figure prominently in both experienced well-being and in decision making. In the first paper, the well-being question is addressed empirically through the use of self-reported life satisfaction and high-resolution census and survey data in Canada. Strong income externalities are found at multiple spatial scales after controlling for various confounding factors. The second paper explores the general equilibrium consequences of a utility function having an explicit comparison with neighbours’ consumption. The question is investigated in a model in which decision makers knowingly choose their neighbours — and hence their consumption reference level — as well as their own consumption expenditure, thereby helping to set the reference level for nearby others. For both discrete and continuous distributions of types in an economy with a heterogeneous population undergoing such endogenous formation of consumption reference groups, there exist general equilibria in which differentiation of neighbourhoods occurs endogenously. The novel welfare implications of growth in such economies are described. The final paper addresses econometric reservations about the use of subjective reports as dependent variables. The date and location of survey interviews are combined with weather and climate records to construct the random component of weather conditions experienced by respondents on the day of their interview. Standard inferences about the determinants of life satisfaction remain robust after taking into account this significant source of affective bias.

This dissertation combines three contributions to the literature on the determinants of well-being and the social nature of preferences. Departures from self-centred, consumption-oriented decision making are increasingly common in economic theory and are empirically well motivated by a wide range of behavioural data from experiments, surveys, and econometric inference. The first two contributions are focused on the idea that reference levels set by others’ consumption may figure prominently in both experienced well-being and in decision making. In the first paper, the well-being question is addressed empirically through the use of self-reported life satisfaction and high-resolution census and survey data in Canada. Strong income externalities are found at multiple spatial scales after controlling for various confounding factors. The second paper explores the general equilibrium consequences of a utility function having an explicit comparison with neighbours’ consumption. The question is investigated in a model in which decision makers knowingly choose their neighbours — and hence their consumption reference level — as well as their own consumption expenditure, thereby helping to set the reference level for nearby others. For both discrete and continuous distributions of types in an economy with a heterogeneous population undergoing such endogenous formation of consumption reference groups, there exist general equilibria in which differentiation of neighbourhoods occurs endogenously. The novel welfare implications of growth in such economies are described. The final paper addresses econometric reservations about the use of subjective reports as dependent variables. The date and location of survey interviews are combined with weather and climate records to construct the random component of weather conditions experienced by respondents on the day of their interview. Standard inferences about the determinants of life satisfaction remain robust after taking into account this significant source of affective bias.

This dissertation combines three contributions to the literature on the determinants of well-being and the social nature of preferences. Departures from self-centred, consumption-oriented decision making are increasingly common in economic theory and are empirically well motivated by a wide range of behavioural data from experiments, surveys, and econometric inference. The first two contributions are focused on the idea that reference levels set by others’ consumption may figure prominently in both experienced well-being and in decision making. In the first paper, the well-being question is addressed empirically through the use of self-reported life satisfaction and high-resolution census and survey data in Canada. Strong income externalities are found at multiple spatial scales after controlling for various confounding factors. The second paper explores the general equilibrium consequences of a utility function having an explicit comparison with neighbours’ consumption. The question is investigated in a model in which decision makers knowingly choose their neighbours — and hence their consumption reference level — as well as their own consumption expenditure, thereby helping to set the reference level for nearby others. For both discrete and continuous distributions of types in an economy with a heterogeneous population undergoing such endogenous formation of consumption reference groups, there exist general equilibria in which differentiation of neighbourhoods occurs endogenously. The novel welfare implications of growth in such economies are described. The final paper addresses econometric reservations about the use of subjective reports as dependent variables. The date and location of survey interviews are combined with weather and climate records to construct the random component of weather conditions experienced by respondents on the day of their interview. Standard inferences about the determinants of life satisfaction remain robust after taking into account this significant source of affective bias. / Arts, Faculty of / Vancouver School of Economics / Graduate

Background: This study discusses the phenomenon of luxury goods as investment assets,focusing on luxury watches in particular. The rise of globalization and increased wealth,particularly among the middle and high-income groups in developing countries, hascreated a larger potential customer base for luxury items. This has led to an increasing interest in luxury goods as investment assets, including collectibles such as cars, art, andwine. The recent development of online niche marketplaces for luxury goods has enabledthe systematic collection of data, facilitating research on Veblen goods as alternativeinvestment assets. Therefore, it is interesting to analyze the financial performance ofinvestments in luxury watches as compared to traditional assets. Purpose: The purpose of this study is to analyze the comparative performance ofinvesting in luxury watches versus traditional assets such as equities and bonds. Methodology: This study collects data on luxury watch prices and characteristics. Thehedonic pricing method is used to regress the price of the watches on their characteristics.The regression results are used to analyze the price impact of the characteristics, as well asto create a watch price index. In order to evaluate the index performance, data is collectedfor the MSCI World Index and the Bloomberg U.S. Aggregate Bond Index. For all the indices, the financial metrics of the Sharpe ratio, Treynor ratio, CAPM, and Jensen’s alphaare calculated. Conclusion: This study suggests that luxury watches, with their wide price ranges and high resale value, have been a viable option for portfolio diversification during thestudied five-year period between 2018 and 2023. The watch index yields an averagereturn of 2.01 % and a cumulative return of 49.35 %, outperforming the MSCI World Indexwith average returns of 1.38 % and the Bloomberg U.S. Aggregate Bond Index with -0.01%, and cumulative returns of 31.90 % and -0.15 %, respectively. The watch index alsooutperforms the compared indices in terms of the financial metrics Sharpe ratio, Treynorratio, CAPM, and Jensen’s alpha. The results suggest that the most important valuedrivers for luxury watches are: Brand (Audemars Piguet, Patek Philippe, and VacheronConstantin), Features (Chronograph, tourbillon, and rotating bezel) and Case Material(bronze, rose gold, and yellow gold).