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Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis

  • Andrew E. Clark
  • Ed Diener
  • Yannis Georgellis
  • Richard E. Lucas

We look for evidence of habituation in twenty waves of German panel data: do individuals, after life and labour market events, tend to return to some baseline level of well-being? Although the strongest life satisfaction effect is often at the time of the event, we find significant lag and lead effects. We cannot reject the hypothesis of complete adaptation to marriage, divorce, widowhood, birth of child, and layoff. However, there is little evidence of adaptation to unemployment for men. Men are somewhat more affected by labour market events (unemployment and layoffs) than are women, but in general the patterns of anticipation and adaptation are remarkably similar by sex.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.78585.de/diw_sp0084.pdf
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Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 84.

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Length: 25 p.
Date of creation: 2008
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp84
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  16. Gary S. Becker & Kevin M. Murphy, 1986. "A Theory of Rational Addiction," University of Chicago - George G. Stigler Center for Study of Economy and State 41, Chicago - Center for Study of Economy and State.
  17. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May.
  18. Agerbo, E. & Eriksson, T. & Mortensen, P.B. & Westergard-Nielsen, N., 1998. "Unemployment and Mental Disorder - An Empirical Analysis," Papers 98-02, Centre for Labour Market and Social Research, Danmark-.
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