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Unemployment Alters the Set-Point for Life Satisfaction


  • Andrew E. Clark
  • Yannis Georgellis


According to set-point theories of subjective well-being, people react to events, but then return to initial levels of happiness and satisfaction over time. We test this idea by examining reaction and adaptation to unemployment in a 15-year longitudinal study. In accordance with set-point theory, individuals first reacted strongly to unemployment and then shifted back toward their former (or “baseline”) levels of life satisfaction. However, on average, individuals did not completely return to their former levels of life satisfaction, even after they became re-employed. The findings suggests that even a short period of unemployment can cause an alteration in a person’s long-term set-point. Within-person analyses showed, however, that there are considerable individual differences in reaction and adaptation to unemployment. Although there was substantial stability in life satisfaction over the years, unemployment did influence long-term levels, thus suggesting that in addition to personality, long-term subjective well-being can also be influenced by life circumstances.

Suggested Citation

  • Andrew E. Clark & Yannis Georgellis, 2002. "Unemployment Alters the Set-Point for Life Satisfaction," Economics and Finance Discussion Papers 02-16, Economics and Finance Section, School of Social Sciences, Brunel University.
  • Handle: RePEc:bru:bruedp:02-16

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