How well do individuals predict their future life satisfaction? Evidence from panel data following a nationwide exogenous shock
AbstractUsing German panel data, we investigate how well individuals predict their own future life satisfaction. The context is the decade following the 1990 reunification of Germany, which provided a large shock to the future prospects of the inhabitants of the former East Germany. We find that the majority of East Germans significantly overestimated the satisfaction gains from reunification in the years immediately after transition, but by 1994 had converged on correct aggregate expectations. Some evidence of micro-heterogeneity in the prediction errors is found by age and education. For West Germans, we find some initial over-optimism, although less than for East Germans.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 42 (2009)
Issue (Month): 4 (November)
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Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
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Find related papers by JEL classification:
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
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- I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
- Z1 - Other Special Topics - - Cultural Economics
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- Marcus Klemm, 2011.
"You Don‘t Know what You‘ve got till It‘s Gone! Unemployment and Intertemporal Changes in Self-Reported Life Satisfaction,"
Ruhr Economic Papers
0297, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
- Marcus Klemm, 2011. "You Don't Know What You've Got till It's Gone!: Unemployment and Intertemporal Changes in Self-Reported Life Satisfaction," SOEPpapers on Multidisciplinary Panel Data Research 421, DIW Berlin, The German Socio-Economic Panel (SOEP).
- Michael Kind & John P. Haisken-DeNew, 2012.
"Sons' Unexpected Long Term Scarring Due to Fathers' Unemployment,"
Melbourne Institute Working Paper Series
wp2012n21, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
- Michael Kind & John P. Haisken-DeNew, 2012. "Sons‘ Unexpected Long Term Scarring due to Fathers‘ Unemployment," Ruhr Economic Papers 0375, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
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