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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. 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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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 19656.

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Length: 28 pages
Date of creation: Nov 2007
Date of revision:
Handle: RePEc:ehl:lserod:19656
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  1. Andrew Clark, 2001. "Unemployment As A Social Norm: Psychological Evidence from Panel Data," DELTA Working Papers 2001-17, DELTA (Ecole normale supérieure).
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  12. 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-.
  13. Becker, Gary S & Grossman, Michael & Murphy, Kevin M, 1994. "An Empirical Analysis of Cigarette Addiction," American Economic Review, American Economic Association, vol. 84(3), pages 396-418, June.
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  16. Easterlin, Richard A., 2005. "A puzzle for adaptive theory," Journal of Economic Behavior & Organization, Elsevier, vol. 56(4), pages 513-521, April.
  17. Andrew E. Clark, 2006. "A note on unhappiness and unemployment duration," PSE Working Papers halshs-00590444, HAL.
  18. Anke C. Zimmermann & Richard A. Easterlin, 2006. "Happily Ever After? Cohabitation, Marriage, Divorce, and Happiness in Germany," Population and Development Review, The Population Council, Inc., vol. 32(3), pages 511-528.
  19. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP): Scope, Evolution and Enhancements," SOEPpapers on Multidisciplinary Panel Data Research 1, DIW Berlin, The German Socio-Economic Panel (SOEP).
  20. Andrew Clark & Yannis Georgellis & Peter Sanfey, 1997. "Job Satisfaction, Wage Changes and Quits: Evidence from Germany," Studies in Economics 9711, School of Economics, University of Kent.
  21. Korpi, Tomas, 1997. "Is utility related to employment status? Employment, unemployment, labor market policies and subjective well-being among Swedish youth," Labour Economics, Elsevier, vol. 4(2), pages 125-147, June.
  22. Richard E. Lucas & Andrew E. Clark, 2005. "Do people really adapt to marriage?," PSE Working Papers halshs-00590574, HAL.
  23. Jonathan Gruber & Sendhil Mullainathan, 2002. "Do Cigarette Taxes Make Smokers Happier?," NBER Working Papers 8872, National Bureau of Economic Research, Inc.
  24. Stutzer, Alois & Frey, Bruno S., 2006. "Does marriage make people happy, or do happy people get married?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(2), pages 326-347, April.
  25. Gardner, Jonathan & Oswald, Andrew J., 2005. "Do Divorcing Couples Become Happier By Breaking Up?," IZA Discussion Papers 1788, Institute for the Study of Labor (IZA).
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  27. Whelan, Christopher T. & Hannan, Damian F. & Creighton, Sean, 1991. "Unemployment, Poverty and Psychological Distress," Research Series, Economic and Social Research Institute (ESRI), number GRS150.
  28. Gerlach, Knut & Stephan, Gesine, 1996. "A paper on unhappiness and unemployment in Germany," Economics Letters, Elsevier, vol. 52(3), pages 325-330, September.
  29. Richard B. Freeman, 1977. "Job Satisfaction as an Economic Variable," NBER Working Papers 0225, National Bureau of Economic Research, Inc.
  30. Hendrik Jürges, 2007. "Unemployment, life satisfaction and retrospective error," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 170(1), pages 43-61.
  31. Luigino Bruni & Robert Sugden, 2007. "The road not taken: how psychology was removed from economics, and how it might be brought back," Economic Journal, Royal Economic Society, vol. 117(516), pages 146-173, 01.
  32. Clark, Andrew E & Georgellis, Yannis & Sanfey, Peter, 2001. "Scarring: The Psychological Impact of Past Unemployment," Economica, London School of Economics and Political Science, vol. 68(270), pages 221-41, May.
  33. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2006. "Income and happiness: Evidence, explanations and economic implications," PSE Working Papers halshs-00590436, HAL.
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