IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Retirement and Subjective Well-Being

  • Bonsang Eric
  • Klein Tobias J.

    (ROA rm)

We provide an explanation for the common finding that the effect of retirement onlife satisfaction is negligible. For this we use subjective well-being measures for lifeand domains of life satisfaction that are available in the German Socio-Economic Panel(GSOEP) and show that the effect of voluntary retirement on satisfaction with currenthousehold income is negative, while the effect on satisfaction with leisure is positive.At the same time, the effect on health satisfaction is positive but small. Following thelife domain approach we then argue that these effects offset each other for an averageindividual and that therefore the overall effect is negligible. Furthermore, we showthat it is important to distinguish between voluntary and involuntary retirement. Theeffect of involuntary retirement is negative because the adverse effect on satisfactionwith household income is bigger, the favorable effect on satisfaction with leisure issmaller, and the effect on satisfaction with health is not significantly different fromzero. These results turn out to be robust to using different identification strategiessuch as fixed effects and first differences estimation, as well as instrumental variablesestimation using eligibility ages and plant closures as instruments for voluntary andinvoluntary retirement.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://digitalarchive.maastrichtuniversity.nl/fedora/objects/guid:67fd7b24-ea65-40ad-aec5-1d4fb995d059/datastreams/ASSET1/content
Our checks indicate that this address may not be valid because: 401 Unauthorized. If this is indeed the case, please notify (Charles Bollen)


Download Restriction: no

Paper provided by Maastricht University, Research Centre for Education and the Labour Market (ROA) in its series ROA Research Memorandum with number 005.

as
in new window

Length:
Date of creation: 2011
Date of revision:
Handle: RePEc:unm:umaror:2011005
Contact details of provider: Postal: P.O. Box 616, 6200 MD Maastricht
Phone: 043-3883647
Fax: 043-3210999
Web page: http://www.maastrichtuniversity.nl/
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Schwerdt, Guido, 2005. "Why does consumption fall at retirement? Evidence from Germany," Economics Letters, Elsevier, vol. 89(3), pages 300-305, December.
  2. Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, vol. 111(473), pages 465-84, July.
  3. van Praag, B. M. S. & Frijters, P. & Ferrer-i-Carbonell, A., 2003. "The anatomy of subjective well-being," Journal of Economic Behavior & Organization, Elsevier, vol. 51(1), pages 29-49, May.
  4. Andrew E. Clark & Ed Diener & Yannis Georgellis & Richard E. Lucas, 2007. "Lags and leads in life satisfaction: a test of the baseline hypothesis," LSE Research Online Documents on Economics 19656, London School of Economics and Political Science, LSE Library.
  5. Blau, David M., 2007. "Retirement and Consumption in a Life Cycle Model," IZA Discussion Papers 2986, Institute for the Study of Labor (IZA).
  6. Easterlin, Richard A. & Sawangfa, Onnicha, 2007. "Happiness and Domain Satisfaction: Theory and Evidence," IZA Discussion Papers 2584, Institute for the Study of Labor (IZA).
  7. Ferrer-i-Carbonell, Ada, 2005. "Income and well-being: an empirical analysis of the comparison income effect," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 997-1019, June.
  8. Bernard M.S. van Praag & Ada Ferrer-i-Carbonell, 2002. "Life Satisfaction Differences between Workers and Non-Workers - The Value of Participation per se," Tinbergen Institute Discussion Papers 02-018/3, Tinbergen Institute.
  9. Blanchflower, David G. & Oswald, Andrew J., 2001. "Well-Being Over Time in Britain and the USA," The Warwick Economics Research Paper Series (TWERPS) 616, University of Warwick, Department of Economics.
  10. B. Douglas Bernheim & Jonathan Skinner & Steven Weinberg, 1997. "What Accounts for the Variation in Retirement Wealth Among U.S. Households?," NBER Working Papers 6227, National Bureau of Economic Research, Inc.
  11. Kevin Neuman, 2008. "Quit Your Job and Get Healthier? The Effect of Retirement on Health," Journal of Labor Research, Springer, vol. 29(2), pages 177-201, June.
  12. Jonathan Skinner, 2007. "Are You Sure You're Saving Enough for Retirement?," NBER Working Papers 12981, National Bureau of Economic Research, Inc.
  13. Joshua D. Angrist & Guido W. Imbens, 1995. "Identification and Estimation of Local Average Treatment Effects," NBER Technical Working Papers 0118, National Bureau of Economic Research, Inc.
  14. Lindeboom, Maarten & Portrait, France & van den Berg, Gerard, 2002. "An econometric analysis of the mental-health effects of major events in the life of older individuals," Working Paper Series 2002:19, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  15. Ravallion, Martin & Lokshin, Michael, 2001. "Identifying Welfare Effects from Subjective Questions," Economica, London School of Economics and Political Science, vol. 68(271), pages 335-57, August.
  16. Michael Hurd & Susann Rohwedder, 2003. "The Retirement-Consumption Puzzle: Anticipated and Actual Declines in Spending at Retirement," NBER Working Papers 9586, National Bureau of Economic Research, Inc.
  17. McBride, Michael, 2001. "Relative-income effects on subjective well-being in the cross-section," Journal of Economic Behavior & Organization, Elsevier, vol. 45(3), pages 251-278, July.
  18. Bruno S. Frey & Alois Stutzer, 2000. "Happiness, Economy and Institutions," CESifo Working Paper Series 246, CESifo Group Munich.
  19. Bernard M.S. van Praag & Paul Frijters, 1999. "The measurement of welfare and well-being; the Leyden approach," School of Economics and Finance Discussion Papers and Working Papers Series 071a, School of Economics and Finance, Queensland University of Technology.
  20. Steven J. Haider & Melvin Stephens, 2007. "Is There a Retirement-Consumption Puzzle? Evidence Using Subjective Retirement Expectations," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 247-264, May.
  21. Fabrizio Mazzonna & Franco Peracchi, 2009. "Aging, cognitive abilities and retirement," CEIS Research Paper 152, Tor Vergata University, CEIS, revised 05 Dec 2012.
  22. Daniel Kahneman & Alan B. Krueger, 2006. "Developments in the Measurement of Subjective Well-Being," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 3-24, Winter.
  23. Finkelstein, Amy N. & Luttmer, Erzo F. P. & Notowidigdo, Matthew J., 2009. "Approaches to Estimating the Health State Dependence of the Utility Function," Working Paper Series rwp09-002, Harvard University, John F. Kennedy School of Government.
  24. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
  25. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
  26. Susann Rohwedder & Robert J. Willis, 2010. "Mental Retirement," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 119-38, Winter.
  27. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
  28. 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, 07.
  29. Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Why Are the Unemployed So Unhappy? Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 65(257), pages 1-15, February.
  30. Salm, Martin, 2009. "Does Job Loss Cause Ill Health?," IZA Discussion Papers 4147, Institute for the Study of Labor (IZA).
  31. Eric French, 2004. "The Effects of Health, Wealth and Wages on Labor Supply and Retirement Behavior," 2004 Meeting Papers 96, Society for Economic Dynamics.
  32. Layard, R. & Mayraz, G. & Nickell, S., 2008. "The marginal utility of income," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1846-1857, August.
  33. Hullegie P & Klein TJ, 2009. "The effect of private health insurance on medical care utilization and self-assessed health in Germany," Health, Econometrics and Data Group (HEDG) Working Papers 09/17, HEDG, c/o Department of Economics, University of York.
  34. Frijters, Paul, 2000. "Do individuals try to maximize general satisfaction?," Journal of Economic Psychology, Elsevier, vol. 21(3), pages 281-304, June.
  35. 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.
  36. Mark Aguiar & Erik Hurst, 2005. "Consumption versus Expenditure," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 919-948, October.
  37. Bonsang, Eric & Adam, Stéphane & Perelman, Sergio, 2012. "Does retirement affect cognitive functioning?," Journal of Health Economics, Elsevier, vol. 31(3), pages 490-501.
  38. Coe, Norma B. & Zamarro, Gema, 2011. "Retirement effects on health in Europe," Journal of Health Economics, Elsevier, vol. 30(1), pages 77-86, January.
  39. Andrew E. Clark & Yarine Fawaz, 2009. "Valuing Jobs Via Retirement: European Evidence," National Institute Economic Review, National Institute of Economic and Social Research, vol. 209(1), pages 88-103, July.
  40. Robert J. MacCulloch & Rafael Di Tella & Andrew J. Oswald, 2001. "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness," American Economic Review, American Economic Association, vol. 91(1), pages 335-341, March.
  41. van Praag, Bernard M. S., 2007. "Perspectives from the Happiness Literature and the Role of New Instruments for Policy Analysis," IZA Discussion Papers 2568, Institute for the Study of Labor (IZA).
  42. Andrew Clark & Yannis Georgellis & Peter Sanfey, 1999. "Scarring: The Psychological Impact of Past Unemployment," Studies in Economics 9903, School of Economics, University of Kent.
  43. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May.
  44. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  45. John Laitner & Dan Silverman, 2005. "Estimating Life-Cycle Parameters from Consumption Behavior at Retirement," NBER Working Papers 11163, National Bureau of Economic Research, Inc.
  46. repec:hal:wpaper:halshs-00566855 is not listed on IDEAS
  47. Salm, M., 2009. "Does job loss cause ill health?," Other publications TiSEM 314436db-9957-4912-ba47-9, Tilburg University, School of Economics and Management.
  48. Bender, Keith A., 2012. "An analysis of well-being in retirement: The role of pensions, health, and ‘voluntariness’ of retirement," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(4), pages 424-433.
  49. Andrew E. Clark & Yarine Fawaz, 2009. "Valuing jobs via retirement: European evidence," PSE Working Papers halshs-00566855, HAL.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:unm:umaror:2011005. 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: (Charles Bollen)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.