Well-Being over the Life Span: Semiparametric Evidence from British and German Longitudinal Data
AbstractThis paper applies semiparametric regression models using penalized splines to investigate the profile of well-being over the life span. Splines have the advantage that they do not require a priori assumptions about the form of the curve. Using data from the British Household Panel Survey (BHPS) and the German Socio-Economic Panel Study (SOEP), the analysis shows a common, quite similar, age-specific pattern of life satisfaction for both Britain and Germany that can be characterized by three age stages. In the first stage, life satisfaction declines until approximately the fifth life decade. In the second age stage, well-being clearly increases and has a second turning point (maximum) after which well-being decreases in the third age stage. Several reasons for the three-phase pattern are discussed. We point to the fact that neither polynomial functions of the third nor the fourth degree describe the relationship adequately: polynomials locate the minimum and the maximum imprecisely. In addition, our analysis discusses the indistinguishability of age, period, and cohort effects: we propose estimating age-period models that control for cohort effects including substantive variables, such as the life expectancy of the birth cohort, and further observed socioeconomic characteristics in the regression.
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Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 889.
Length: 39 p.
Date of creation: 2009
Date of revision:
Subjective well-being; life satisfaction; semiparametric regression; penalized splines; age-period model; age-cohort model;
Find related papers by JEL classification:
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- D10 - Microeconomics - - Household Behavior - - - General
- I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
This paper has been announced in the following NEP Reports:
- NEP-AGE-2009-05-23 (Economics of Ageing)
- NEP-ALL-2009-05-23 (All new papers)
- NEP-HAP-2009-05-23 (Economics of Happiness)
- NEP-LTV-2009-05-23 (Unemployment, Inequality & Poverty)
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