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An Examination of the Dynamics of Happiness Using Vector Autoregressions

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  • Martin Binder

    ()

  • Alex Coad

    ()

Abstract

We use a panel vector autoregressions model to examine the coevolution of changes in happiness and changes in income, health, marital status as well as 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 happiness 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 happiness in subsequent periods, suggesting adaptation dynamics in all domains. These findings are quite robust to different model specifications.

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Bibliographic Info

Paper provided by Max Planck Institute of Economics, Evolutionary Economics Group in its series Papers on Economics and Evolution with number 2009-04.

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Date of creation: Apr 2009
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Handle: RePEc:esi:evopap:2009-04

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Keywords: Happiness dynamics; vector autoregressions; subjective well-being; BHPS Length 36 pages;

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References

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  1. Betsey Stevenson & Justin Wolfers, 2008. "Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 1-102.
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  19. Graham, Carol & Eggers, Andrew & Sukhtankar, Sandip, 2004. "Does happiness pay?: An exploration based on panel data from Russia," Journal of Economic Behavior & Organization, Elsevier, vol. 55(3), pages 319-342, November.
  20. James P. Smith, 1999. "Healthy Bodies and Thick Wallets: The Dual Relation between Health and Economic Status," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 145-166, Spring.
  21. Blackburn, McKinley & Korenman, Sanders, 1994. "The Declining Marital-Status Earnings Differential," Journal of Population Economics, Springer, vol. 7(3), pages 247-70, July.
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  23. Kate Antonovics & Robert Town, 2004. "Are All the Good Men Married? Uncovering the Sources of the Marital Wage Premium," American Economic Review, American Economic Association, vol. 94(2), pages 317-321, May.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. What makes you happy? Expectations
    by Economic Logician in Economic Logic on 2009-06-26 15:38:00
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Cited by:
  1. Martin Binder & Alex Coad, 2010. "Disentangling the Circularity in Sen's Capability Approach – An Analysis of the Co-Evolution of Functioning Achievement and Resources," Papers on Economics and Evolution 2010-04, Max Planck Institute of Economics, Evolutionary Economics Group.
  2. Martin Binder & Alex Coad, 2011. "Disentangling the Circularity in Sen’s Capability Approach: An Analysis of the Co-Evolution of Functioning Achievement and Resources," Social Indicators Research, Springer, vol. 103(3), pages 327-355, September.

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