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The literature in economic psychology and quality-of-life studies alludes to a negative relationship between materialism and life satisfaction. In contrast, the macroeconomic literature implies a positive relationship between material consumption and economic growth. That is, materialism may be both good and bad. We develop a model that reconciles these two contrasting viewpoints by asserting that materialism may lead to life dissatisfaction when materialistic people evaluate their standard of living using fantasy-based expectations (e.g., ideal expectations), which increases the likelihood that they would evaluate their standard of living negatively. In turn, dissatisfaction with standard of living increases the likelihood that they would evaluate their life negatively. However, materialistic people who evaluate their standard of living using reality-based expectations (e.g., ability expectations) are likely to feel more economically motivated than their non-materialistic counterparts, and this economic motivation is likely to contribute significantly and positively to life satisfaction. Survey data were collected from seven major cities each in a different country (Australia, Bosnia/Herzegovina, Germany, Egypt, Korea, Turkey, and the USA) using a probability sample (cluster sampling method involving income stratification). The results provide support for the model. The economic public policy implications concerning how people evaluate their standard of living using ability-based expectations are discussed in the context of the ideals of meritocracy.

This paper develops theory related to advertising, materialism, and life satisfaction by formally testing explanations related to the antecedents and consequences of materialism. Survey data were collected from seven major cities each in a different country (Australia, Bosnia/Herzegovina, Germany, Egypt, Korea, Turkey, and the USA) using a probability sample (cluster sampling method involving income stratification). The results showed that the extent to which advertising is perceived to be materialistic contributes to materialism. Materialism, in turn, leads to the frequent use of various standards of comparison in making judgments about standard of living. As judgments about standard of living increase, standard of living is evaluated more negatively. In turn, negative self-evaluations contribute significantly to dissatisfaction with life.