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Adaptation to Poverty in Long-Run Panel Data

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  • Andrew E. Clark
  • Conchita D´Ambrosio
  • Simone Ghislandi

Abstract

We consider the link between poverty and subjective well-being, and focus in particular on potential adaptation to poverty. We use panel data on almost 45,800 individuals living in Germany from 1992 to 2011 to show first that life satisfaction falls with both the incidence and intensity of contemporaneous poverty. We then reveal that there is little evidence of adaptation within a poverty spell: poverty starts bad and stays bad in terms of subjective well-being. We cannot identify any causes of poverty entry which are unambiguously associated with adaptation to poverty.

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Bibliographic Info

Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 634.

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Length: 22 p.
Date of creation: 2014
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp634

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Keywords: Income; poverty; subjective well-being; adaptation; SOEP;

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References

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  1. Clemens Hetschko & Andreas Knabe & Ronnie Schöb, 2011. "Changing Identity: Retiring from Unemployment," SOEPpapers on Multidisciplinary Panel Data Research 399, DIW Berlin, The German Socio-Economic Panel (SOEP).
  2. Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
  3. Oswald, Andrew J. & Powdthavee, Nattavudh, 2008. "Does happiness adapt? A longitudinal study of disability with implications for economists and judges," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1061-1077, June.
  4. Ada Ferrer-i-Carbonell & Paul Frijters, 2002. "How important is Methodology for the Estimates of the Determinants of Happiness?," Tinbergen Institute Discussion Papers 02-024/3, Tinbergen Institute.
  5. David Clark, 2009. "Adaptation, Poverty and Well-Being: Some Issues and Observations with Special Reference to the Capability Approach and Development Studies," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 10(1), pages 21-42.
  6. Blanchflower, David G. & Oswald, Andrew J., 2001. "Well-Being Over Time in Britain and the USA," The Warwick Economics Research Paper Series (TWERPS) 616, University of Warwick, Department of Economics.
  7. Rafael Di Tella & John Haisken-De New & Robert MacCulloch, 2007. "Happiness Adaptation to Income and to Status in an Individual Panel," NBER Working Papers 13159, National Bureau of Economic Research, Inc.
  8. Clark, Andrew E., 1999. "Are wages habit-forming? evidence from micro data," Journal of Economic Behavior & Organization, Elsevier, vol. 39(2), pages 179-200, June.
  9. Clark, Andrew E. & Frijters, Paul & Shields, Michael A., 2007. "Relative Income, Happiness and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," IZA Discussion Papers 2840, Institute for the Study of Labor (IZA).
  10. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-31, March.
  11. Fleurbaey, Marc & Blanchet, Didier, 2013. "Beyond GDP: Measuring Welfare and Assessing Sustainability," OUP Catalogue, Oxford University Press, number 9780199767199.
  12. Rafael Di Tella & Robert MacCulloch, 2006. "Some Uses of Happiness Data in Economics," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 25-46, Winter.
  13. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. “Poverty starts bad and stays bad”
    by Robin in Cherokee Gothic on 2014-02-06 14:00:00
  2. Policy, & the aspirations gap
    by chris dillow in Stumbling and Mumbling on 2014-02-12 14:00:03

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