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Unmet Aspirations as an Explanation for the Age U-shape in Wellbeing

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  • Schwandt, Hannes

Abstract

An emerging economic literature has found evidence that wellbeing follows a U-shape over age. Some theories have assumed that the U-shape is caused by unmet expectations that are felt painfully in midlife but beneficially abandoned and experienced with less regret during old age. In a unique panel of 132,609 life satisfaction expectations matched to subsequent realizations, I find that future life satisfaction is strongly overestimated when young and underestimated during old age. This pattern is stable over time and observed within cohorts as well as across socio-economic groups. These findings support theories that unmet expectations drive the age U-shape in wellbeing.

Suggested Citation

  • Schwandt, Hannes, 2014. "Unmet Aspirations as an Explanation for the Age U-shape in Wellbeing," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100360, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc14:100360
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    JEL classification:

    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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