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Well-Being over the Life Span: Semiparametric Evidence from British and German Longitudinal Data

  • Wunder, Christoph

    ()

    (Martin-Luther University, Halle-Wittenberg)

  • Wiencierz, Andrea

    (University of Munich)

  • Schwarze, Johannes

    (University of Bamberg)

  • Küchenhoff, Helmut

    ()

    (University of Munich)

  • Kleyer, Sara

    (University of Munich)

  • Bleninger, Philipp

    (University of Munich)

Registered author(s):

    This paper applies semiparametric regression models using penalized splines to investigate the profile of well-being over the life span. Splines have the advantage that they do not require a priori assumptions about the form of the curve. Using data from the British Household Panel Survey (BHPS) and the German Socio-Economic Panel Study (SOEP), the analysis shows a common, quite similar, age-specific pattern of life satisfaction for both Britain and Germany that can be characterized by three age stages. In the first stage, life satisfaction declines until approximately the fifth life decade. In the second age stage, well-being clearly increases and has a second turning point (maximum) after which well-being decreases in the third age stage. Several reasons for the three-phase pattern are discussed. We point to the fact that neither polynomial functions of the third nor the fourth degree describe the relationship adequately: polynomials locate the minimum and the maximum imprecisely. In addition, our analysis discusses the indistinguishability of age, period, and cohort effects: we propose estimating age-period models that control for cohort effects including substantive variables, such as the life expectancy of the birth cohort, and further observed socioeconomic characteristics in the regression.

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    File URL: http://ftp.iza.org/dp4155.pdf
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    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4155.

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    Length: 41 pages
    Date of creation: Apr 2009
    Date of revision:
    Handle: RePEc:iza:izadps:dp4155
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    1. Oliver Schilling, 2006. "Development of Life Satisfaction in Old Age: Another View on the "Paradox''," Social Indicators Research, Springer, vol. 75(2), pages 241-271, 01.
    2. Ada Ferrer-i-Carbonell & Paul Frijters, 2002. "How important is Methodology for the Estimates of the Determinants of Happiness?," Tinbergen Institute Discussion Papers 02-024/3, Tinbergen Institute.
    3. 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.
    4. Blanchflower, David G. & Oswald, Andrew J., 2004. "Well-being over time in Britain and the USA," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1359-1386, July.
    5. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-38, May.
    6. Easterlin, Richard A., 2006. "Life cycle happiness and its sources: Intersections of psychology, economics, and demography," Journal of Economic Psychology, Elsevier, vol. 27(4), pages 463-482, August.
    7. Finis Welch, 1979. "Effects of Cohort Size on Earnings: The Baby Boom Babies' Financial Bust," UCLA Economics Working Papers 146, UCLA Department of Economics.
    8. Welch, Finis, 1979. "Effects of Cohort Size on Earnings: The Baby Boom Babies' Financial Bust," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S65-97, October.
    9. Robert Jäckle & Oliver Himmler, 2010. "Health and Wages: Panel Data Estimates Considering Selection and Endogeneity," Journal of Human Resources, University of Wisconsin Press, vol. 45(2).
    10. Blanchflower, David G. & Oswald, Andrew J., 2007. "Is Well-being U-Shaped over the Life Cycle?," The Warwick Economics Research Paper Series (TWERPS) 826, University of Warwick, Department of Economics.
    11. Andrew E. Clark & Andrew J. Oswald, 2006. "The curved relationship between subjective well-being and age," PSE Working Papers halshs-00590404, HAL.
    12. DiTella, Rafael & MacCulloch, Robert & Oswald, Andrew J., 2001. "Preferences over inflation and unemployment: Evidence from surveys of happiness," ZEI Working Papers B 03-2001, ZEI - Center for European Integration Studies, University of Bonn.
    13. J.J. Ehrhardt & W.E. Saris & R. Veenhoven, 2000. "Stability of Life-satisfaction over Time," Journal of Happiness Studies, Springer, vol. 1(2), pages 177-205, June.
    14. Kassenboehmer, Sonja C. & Haisken-DeNew, John P., 2012. "Heresy or enlightenment? The well-being age U-shape effect is flat," Economics Letters, Elsevier, vol. 117(1), pages 235-238.
    15. Wencke Gwozdz & Alfonso Sousa-Poza, 2010. "Ageing, Health and Life Satisfaction of the Oldest Old: An Analysis for Germany," Social Indicators Research, Springer, vol. 97(3), pages 397-417, July.
    16. repec:cup:cbooks:9780521785167 is not listed on IDEAS
    17. Clark, Andrew E., 2007. "Born To Be Mild? Cohort Effects Don’t (Fully) Explain Why Well-Being Is U-Shaped in Age," IZA Discussion Papers 3170, Institute for the Study of Labor (IZA).
    18. Long Ngo & Matthew P. Wand, . "Smoothing with Mixed Model Software," Journal of Statistical Software, American Statistical Association, vol. 9(i01).
    19. repec:cup:cbooks:9780521780506 is not listed on IDEAS
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