Indonesia Conference Directory

Prior research has shown that peoples utility can be obtained by doing consumption or spending money to fulfill their needs. This research demonstrates that people who spend their money not to fulfill their needs, but to others also matters for their utility. Using the data from the Indonesia Family Life Survey (wave 4 and wave 5) with 26,464 observations, we estimate the correlation between prosocial expenditure and subjective well-being. The result of the probit model estimation showed that prosocial expenditure has a positive correlation to subjective well-being. On average, people who spend more on charity are happier than people who spend less on it. We also found that preschool expenditure between Muslim and nonmuslim observations has a different effect on happiness and life satisfaction. The theoretical framework and implications are discussed.