This article holds the view that intertemporal comparisons of subjective well-being measures are only meaningful when the underlying standards of judgment are unaltered. This is a weak point of such measures. The study investigates the change in the satisfaction judgments resulting from adaptation to income over time. Adaptation is defined to be desensitization (sensitization) to the hedonic effect of income resulting from an upward (downward) adjustment of the standards. A framework is introduced that provides empirical estimates for the rate of adaptation using data from the Socio-Economic Panel Study (SOEP).
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Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers with number
130.
Find related papers by JEL classification: C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
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