Climatic Conditions, Financial and Subjective Wellbeing Evaluations

We study the impact of climatic conditions on self-reported financial and subjective wellbeing indicators. To inform the climate policy debate, we conduct a unique multi-domain analysis of how monthly weather measurements (sunshine, rainfall, temperature anomaly) relate to financial evaluators (current/expected finances, job/income satisfaction), mental and physical health (mental distress, life/health satisfaction). Matching individual-level data from the British Household and the Understanding Society Panel Surveys to variables from 32 Great Britain weather stations we compile a unique dataset with over 400,000 observations spanning 1991-2018. Eliminating unobserved heterogeneity biases, we provide robust evidence that good climatic conditions increase the probability to give higher subjective financial and wellbeing evaluations, while adverse conditions (particularly temperature anomalies) raise the likelihood to provide pessimistic responses aligning with the mood congruency effect. Our results are robust to a battery of tests including gender and panel survey differences, lagged effects, weather station proximity, and hot/cold temperature shocks