IDEAS home Printed from https://ideas.repec.org/p/diw/diwsop/diw_sp421.html
   My bibliography  Save this paper

You Don't Know What You've Got till It's Gone!: Unemployment and Intertemporal Changes in Self-Reported Life Satisfaction

Author

Listed:
  • Marcus Klemm

Abstract

This paper uses concurrently and - for the first time - retrospectively reported life satisfaction from the 1984 to 1987 waves of the German Socio-Economic Panel to study the importance of different comparison standards for the empirical correlation of unemployment and subjective life satisfaction. It is found that unemployed individuals do not only report significantly lower concurrent satisfaction, but also recall reduced satisfaction from past unemployment well, and retrospectively upgrade their past satisfaction scores. Therefore, the short-term negative effects of unemployment on individual life satisfaction reported in the literature so far are likely underestimated. At the same time, the empirical findings cast doubts on the usefulness of subjective life satisfaction for the precise quantification of welfare effects because of changing comparison standards which greatly limit the intertemporal comparability of the data. For this reason, such data also appear to be of limited use for monitoring long-term economic or social development.

Suggested Citation

  • Marcus Klemm, 2011. "You Don't Know What You've Got till It's Gone!: Unemployment and Intertemporal Changes in Self-Reported Life Satisfaction," SOEPpapers on Multidisciplinary Panel Data Research 421, DIW Berlin, The German Socio-Economic Panel (SOEP).
  • Handle: RePEc:diw:diwsop:diw_sp421
    as

    Download full text from publisher

    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.390637.de/diw_sp0421.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Gerlach, Knut & Stephan, Gesine, 1996. "A paper on unhappiness and unemployment in Germany," Economics Letters, Elsevier, vol. 52(3), pages 325-330, September.
    2. Andrew Clark & Andreas Knabe & Steffen Rätzel, 2009. "Unemployment as a Social Norm in Germany," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 129(2), pages 251-260.
    3. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, July.
    4. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 95-144, March.
    5. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
    6. Paul Frijters & John P. Haisken-DeNew & Michael A. Shields, 2004. "Money Does Matter! Evidence from Increasing Real Income and Life Satisfaction in East Germany Following Reunification," American Economic Review, American Economic Association, vol. 94(3), pages 730-740, June.
    7. Andrew E. Clark & Ed Diener & Yannis Georgellis & Richard E. Lucas, 2008. "Lags And Leads in Life Satisfaction: a Test of the Baseline Hypothesis," Economic Journal, Royal Economic Society, vol. 118(529), pages 222-243, June.
    8. George A. Akerlof & Janet L. Yellen, 1985. "Unemployment Through the Filter of Memory," The Quarterly Journal of Economics, Oxford University Press, vol. 100(3), pages 747-773.
    9. Nick Carroll, 2007. "Unemployment and Psychological Well-being," The Economic Record, The Economic Society of Australia, vol. 83(262), pages 287-302, September.
    10. Gregori Baetschmann & Kevin E. Staub & Rainer Winkelmann, 2015. "Consistent estimation of the fixed effects ordered logit model," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 178(3), pages 685-703, June.
    11. Anna Manzoni & Ruud Luijkx & Ruud Muffels, 2011. "Explaining differences in labour market transitions between panel and life-course data in West-Germany," Quality & Quantity: International Journal of Methodology, Springer, vol. 45(2), pages 241-261, February.
    12. H. Elizabeth Peters, 1988. "Retrospective Versus Panel Data in Analyzing Lifecycle Events," Journal of Human Resources, University of Wisconsin Press, vol. 23(4), pages 488-513.
    13. John Gibson & Bonggeun Kim, 2010. "Non-Classical Measurement Error in Long-Term Retrospective Recall Surveys," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(5), pages 687-695, October.
    14. Angus Deaton, 2012. "The financial crisis and the well-being of Americans," Oxford Economic Papers, Oxford University Press, vol. 64(1), pages 1-26, January.
    15. Stefan Boes & Rainer Winkelmann, 2010. "The Effect of Income on General Life Satisfaction and Dissatisfaction," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 95(1), pages 111-128, January.
    16. Senik, Claudia, 2009. "Direct evidence on income comparisons and their welfare effects," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 408-424, October.
    17. John P. Haisken-DeNew & Markus H. Hahn, 2010. "PanelWhiz: Efficient Data Extraction of Complex Panel Data Sets - An Example Using the German SOEP," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 130(4), pages 643-654.
    18. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP) – Scope, Evolution and Enhancements," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 127(1), pages 139-169.
    19. Schwartz, Carolyn E. & Sprangers, Mirjam A. G., 1999. "Methodological approaches for assessing response shift in longitudinal health-related quality-of-life research," Social Science & Medicine, Elsevier, vol. 48(11), pages 1531-1548, June.
    20. Geishecker, Ingo & Riedl, Maximilian, 2012. "Ordered response models and non-random personality traits: Monte Carlo simulations and a practical guide," Center for European, Governance and Economic Development Research Discussion Papers 116, University of Goettingen, Department of Economics.
    21. Paul Frijters & Harry Greenwell & John P. Haisken-DeNew & Michael A. Shields, 2009. "How well do individuals predict their future life satisfaction? Evidence from panel data following a nationwide exogenous shock," Canadian Journal of Economics, Canadian Economics Association, vol. 42(4), pages 1326-1346, November.
    22. Dolan, Paul & Peasgood, Tessa & White, Mathew, 2008. "Do we really know what makes us happy A review of the economic literature on the factors associated with subjective well-being," Journal of Economic Psychology, Elsevier, vol. 29(1), pages 94-122, February.
    23. Rafael Di Tella & Robert MacCulloch, 2006. "Some Uses of Happiness Data in Economics," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 25-46, Winter.
    24. Abigail Barr, 2010. "Revisiting Michael McBride’s experiment about “Money, happiness, and aspirations”," Discussion Papers 2010003, University of Oxford, Nuffield College.
    25. André Vanoli, 2010. "On the Report by the Commission on the Measurement of Economic Performance and Social Progress (2009)," Working Paper Series of the German Council for Social and Economic Data 162, German Council for Social and Economic Data (RatSWD).
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Life satisfaction; well-being; unemployment; longitudinal and retrospective studies;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

    NEP fields

    This paper has been announced in the following NEP Reports:

    Lists

    This item is featured on the following reading lists or Wikipedia pages:
    1. SOEP based publications

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:diw:diwsop:diw_sp421. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bibliothek). General contact details of provider: http://edirc.repec.org/data/sodiwde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.