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An examination of the dynamics of well-being and life events using vector autoregressions

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  • Binder, Martin
  • Coad, Alex

Abstract

We use a panel vector autoregressions model to examine the coevolution of changes in mental well-being and changes in income, health, marital status and employment status for the British Household Panel Survey (BHPS) data set. This technique allows us to simultaneously analyze the impact of the aforementioned factors on each other. We find that increases in well-being are associated with subsequent increases in income, marriage, employment, and health variables, while increases in the these life-domain variables (except health) tend to be followed by decreases in well-being in subsequent periods, suggesting adaptation dynamics in all domains. In addition to the robust observation that well-being is associated with subsequent longer-term improvements in health status, we observe that health improvements themselves have a long-lasting positive contribution to employment status. Employment status, in turn, has lasting positive effects on income growth. Although well-being per se may be a short-lived phenomenon, our results suggest that it may have longer-term effects through these particular channels. These findings are quite robust to different model specifications.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 76 (2010)
Issue (Month): 2 (November)
Pages: 352-371

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Handle: RePEc:eee:jeborg:v:76:y:2010:i:2:p:352-371

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Web page: http://www.elsevier.com/locate/jebo

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Keywords: Mental well-being Happiness dynamics Vector autoregressions Subjective well-being BHPS;

References

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Citations

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Cited by:
  1. Martin Binder & Alex Coad, 2013. "Life satisfaction and self-employment: a matching approach," Small Business Economics, Springer, vol. 40(4), pages 1009-1033, May.
  2. Martin Binder & Tom Broekel, 2012. "Happiness No Matter the Cost? An Examination on How Efficiently Individuals Reach Their Happiness Levels," Journal of Happiness Studies, Springer, vol. 13(4), pages 621-645, August.
  3. Cortés Aguilar Alexandra & Teresa Garcia-Muñoz & Ana I. Moro Egido, 2013. "Heterogeneous Self-employment and Subjective Well-Being. Evidence from Latin America," ThE Papers 13/05, Department of Economic Theory and Economic History of the University of Granada..
  4. Martin Binder & Alex Coad, 2011. ""I'm afraid I have bad news for you . . ." Estimating the impact of different health impairments on subjective well-being," Papers on Economics and Evolution 2011-15, Philipps University Marburg, Department of Geography.
  5. Chrostek, Pawel, 2013. "An empirical investigation into the determinants and persistence of different types of subjective well-being," MPRA Paper 48292, University Library of Munich, Germany.
  6. Alex Coad & Martin Binder, 2014. "Causal Linkages between Work and Life Satisfaction and Their Determinants in a Structural VAR Approach," Economics Working Paper Archive wp_809, Levy Economics Institute.
  7. Martin Binder & Leonhard K. Lades, 2014. "Autonomy-enhancing Paternalism," Economics Working Paper Archive wp_800, Levy Economics Institute.
  8. Martin Binder & Felix Ward, 2011. "The Structure of Happiness: A Vector Autoregressive Approach," Papers on Economics and Evolution 2011-08, Philipps University Marburg, Department of Geography.
  9. Binder, Martin & Freytag, Andreas, 2013. "Volunteering, subjective well-being and public policy," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 97-119.
  10. Binder, Martin & Coad, Alex, 2011. "From Average Joe's happiness to Miserable Jane and Cheerful John: using quantile regressions to analyze the full subjective well-being distribution," Journal of Economic Behavior & Organization, Elsevier, vol. 79(3), pages 275-290, August.
  11. Martin Binder & Alex Coad, 2012. ""I'm afraid I have bad news for you…" Estimating the impact of different health impairments on subjective well-being," SPRU Working Paper Series 200, SPRU - Science and Technology Policy Research, University of Sussex.
  12. Chrostek, Pawel, 2013. "An empirical investigation into the determinants and persistence of happiness and life evaluation," MPRA Paper 50442, University Library of Munich, Germany.
  13. André Hajek, 2013. "Endogeneity in the Relation between Poverty, Wealth and Life Satisfaction," SOEPpapers on Multidisciplinary Panel Data Research 604, DIW Berlin, The German Socio-Economic Panel (SOEP).
  14. Aguilar, Alexandra Cortés & García Muñoz, Teresa M. & Moro-Egido, Ana I., 2013. "Heterogeneous self-employment and satisfaction in Latin America," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 44-61.
  15. Molnár, György & Kapitány, Zsuzsa, 2014. "Miért elégedetlenek annyira a magyarok az életükkel?. A szubjektív jóllétet befolyásoló tényezők mikroszintű összehasonlító elemzése magyar és osztrák adatokon
    [Why are Hungarians
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 637-671.
  16. Martin Binder, 2013. "Innovativeness and Subjective Well-Being," Social Indicators Research, Springer, vol. 111(2), pages 561-578, April.

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