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A test for the convexity of human well-being over the life cycle: Longitudinal evidence from a 20-year panel

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  • Van Landeghem, Bert

Abstract

A huge cross-section literature, written by economists and others, argues that human well-being is U-shaped through the life cycle. In many cases this U-shape is robust (with a well-known exception the pattern evident in some U.S. data sets if few independent variables are included). However, a lively debate is currently ongoing about its true shape. This paper discusses the identification problem of age, time, and cohort effects. It suggests a simple way to interpret estimates of age variables in a first-difference framework. Building on McKenzie's (2006) methodology, the paper shows that no extra assumptions are needed in order to identify the second derivative of well-being to age, i.e. to estimate the changes in the actual age and well-being relationship. An empirical application, using a large German data set, finds that human well-being is convex in age until after midlife, which is approximately consistent with a U-shaped pattern through life, and not with the concave relationship sometimes found in U.S. studies.

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Bibliographic Info

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

Volume (Year): 81 (2012)
Issue (Month): 2 ()
Pages: 571-582

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Handle: RePEc:eee:jeborg:v:81:y:2012:i:2:p:571-582

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Related research

Keywords: Life cycle happiness; Subjective well-being; Birth cohorts; Time periods; U-shape;

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References

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Cited by:
  1. Weiss, Alexander & King, James E. & Inoue-Murayama, Miho & Matsuzawa, Tetsuro & Oswald, Andrew J., 2012. "Evidence for a ‘Midlife Crisis’ in Great Apes Consistent with the U-Shape in Human Well-Being," IZA Discussion Papers 7009, Institute for the Study of Labor (IZA).
  2. Hannes Schwandt, 2013. "Unmet Aspirations as an Explanation for the Age U-Shape in Human Wellbeing," SOEPpapers on Multidisciplinary Panel Data Research 580, DIW Berlin, The German Socio-Economic Panel (SOEP).
  3. Bert Van Landeghem, 2012. "Panel Conditioning and Self-Reported Satisfaction: Evidence from International Panel Data and Repeated Cross-Sections," SOEPpapers on Multidisciplinary Panel Data Research 484, DIW Berlin, The German Socio-Economic Panel (SOEP).
  4. Gregori Baetschmann & Kevin E. Staub & Raphael Studer, 2012. "Does the stork deliver happiness? Parenthood and life satisfaction," ECON - Working Papers 094, Department of Economics - University of Zurich.
  5. Schwandt, Hannes, 2013. "Unmet Aspirations as an Explanation for the Age U-shape in Human Wellbeing," IZA Discussion Papers 7604, Institute for the Study of Labor (IZA).
  6. Cheng, Terence Chai & Powdthavee, Nattavudh & Oswald, Andrew J., 2014. "Longitudinal Evidence for a Midlife Nadir in Human Well-being: Results from Four Data Sets," IZA Discussion Papers 7942, Institute for the Study of Labor (IZA).

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