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A test for the convexity of human well-being over the life cycle: Longitudinal evidence from a 20-year panel

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  • Van Landeghem, Bert

Abstract

A huge cross-section literature, written by economists and others, argues that human well-being is U-shaped through the life cycle. In many cases this U-shape is robust (with a well-known exception the pattern evident in some U.S. data sets if few independent variables are included). However, a lively debate is currently ongoing about its true shape. This paper discusses the identification problem of age, time, and cohort effects. It suggests a simple way to interpret estimates of age variables in a first-difference framework. Building on McKenzie's (2006) methodology, the paper shows that no extra assumptions are needed in order to identify the second derivative of well-being to age, i.e. to estimate the changes in the actual age and well-being relationship. An empirical application, using a large German data set, finds that human well-being is convex in age until after midlife, which is approximately consistent with a U-shaped pattern through life, and not with the concave relationship sometimes found in U.S. studies.

Suggested Citation

  • Van Landeghem, Bert, 2012. "A test for the convexity of human well-being over the life cycle: Longitudinal evidence from a 20-year panel," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 571-582.
  • Handle: RePEc:eee:jeborg:v:81:y:2012:i:2:p:571-582
    DOI: 10.1016/j.jebo.2011.08.001
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    Cited by:

    1. Terence C. Cheng & Nattavudh Powdthavee & Andrew J. Oswald, 2017. "Longitudinal Evidence for a Midlife Nadir in Human Well‐being: Results from Four Data Sets," Economic Journal, Royal Economic Society, vol. 127(599), pages 126-142, February.
    2. Blanchflower, David G. & Oswald, Andrew J., 2017. "Unhappiness and Pain in Modern America: A Review Essay, and Further Evidence, on Carol Graham's Happiness for All?," IZA Discussion Papers 11184, Institute for the Study of Labor (IZA).
    3. Raquel Fonseca & Arie Kapteyn & Jinkook Lee & Gema Zamarro, 2015. "Does Retirement Make You Happy? A Simultaneous Equations Approach," NBER Chapters,in: Insights in the Economics of Aging, pages 339-372 National Bureau of Economic Research, Inc.
    4. Koen Decancq & Dirk Neumann, 2014. "Does the Choice of Well-Being Measure Matter Empirically?: An Illustration with German Data," SOEPpapers on Multidisciplinary Panel Data Research 717, DIW Berlin, The German Socio-Economic Panel (SOEP).
    5. Schwandt, Hannes, 2016. "Unmet aspirations as an explanation for the age U-shape in wellbeing," Journal of Economic Behavior & Organization, Elsevier, vol. 122(C), pages 75-87.
    6. Schwandt, Hannes, 2013. "Unmet Aspirations as an Explanation for the Age U-shape in Human Wellbeing," IZA Discussion Papers 7604, Institute for the Study of Labor (IZA).
    7. Tonzer, Lena, 2017. "Uncertainty, financial crises, and subjective well-being," IWH Discussion Papers 2/2017, Halle Institute for Economic Research (IWH).
    8. Bauer,Jan Michael & Levin,Victoria & Munoz Boudet,Ana Maria & Nie,Peng & Sousa-Poza,Alfonso, 2015. "Subjective well-being across the lifespan in Europe and Central Asia," Policy Research Working Paper Series 7378, The World Bank.
    9. Blanchflower, David G. & Oswald, Andrew J., 2018. "Unhappiness and Pain in Modern America: A Review Essay, and Further Evidence, on Carol Graham’s Happiness for All?," CAGE Online Working Paper Series 360, Competitive Advantage in the Global Economy (CAGE).
    10. Baetschmann, Gregori & Staub, Kevin E. & Studer, Raphael, 2016. "Does the stork deliver happiness? Parenthood and life satisfaction," Journal of Economic Behavior & Organization, Elsevier, vol. 130(C), pages 242-260.
    11. Weiss, Alexander & King, James E. & Inoue-Murayama, Miho & Matsuzawa, Tetsuro & Oswald, Andrew J., 2012. "Evidence for a ‘Midlife Crisis’ in Great Apes Consistent with the U-Shape in Human Well-Being," IZA Discussion Papers 7009, Institute for the Study of Labor (IZA).
    12. Blanchflower, David G. & Oswald, Andrew J, 2018. "Unhappiness and Pain in Modern America: A Review Essay, and Further Evidence, on Carol Graham’s Happiness for All?," The Warwick Economics Research Paper Series (TWERPS) 1153, University of Warwick, Department of Economics.
    13. repec:spr:qualqt:v:52:y:2018:i:4:d:10.1007_s11135-017-0570-z is not listed on IDEAS
    14. Baruch, Yehuda & Grimland, Shmuel & Vigoda-Gadot, Eran, 2014. "Professional vitality and career success: Mediation, age and outcomes," European Management Journal, Elsevier, vol. 32(3), pages 518-527.
    15. Bert Van Landeghem, 2012. "Panel Conditioning and Self-Reported Satisfaction: Evidence from International Panel Data and Repeated Cross-Sections," SOEPpapers on Multidisciplinary Panel Data Research 484, DIW Berlin, The German Socio-Economic Panel (SOEP).
    16. Blanchflower, David G. & Oswald, Andrew J., 2016. "Antidepressants and age: A new form of evidence for U-shaped well-being through life," Journal of Economic Behavior & Organization, Elsevier, vol. 127(C), pages 46-58.
    17. Tapas Mishra & Mamata Parhi & Raúl Fuentes, 2015. "How Interdependent are Cross-Country Happiness Dynamics?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 122(2), pages 491-518, June.

    More about this item

    Keywords

    Life cycle happiness; Subjective well-being; Birth cohorts; Time periods; U-shape;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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