Abstract
A huge cross-section literature, written by economists and others, argues that human wellbeing is U-shaped through the life cycle. In many cases this U-shape is robust (with a well-known exception the pattern evident in some U.S. data sets if few independent variables are included). However, a lively debate is currently ongoing about its true shape. This paper discusses the identification problem of age, time, and cohort effects. It suggests a simple way to interpret estimates of age variables in a first-difference framework. Building on McKenzie's (2006) methodology, the paper shows that no extra assumptions are needed in order to identify the second derivative of well-being to age, i.e. to estimate the changes in the actual age and well-being relationship. An empirical application, using a large German data set, finds that human well-being is convex in age until after midlife, which is approximately consistent with a U-shaped pattern through life, and not with the concave relationship sometimes found in U.S. studies. (C) 2011 Elsevier B.V. All rights reserved.
Original language | English |
---|---|
Pages (from-to) | 571-582 |
Number of pages | 12 |
Journal | Journal of Economic Behavior & Organization |
Volume | 81 |
Issue number | 2 |
DOIs | |
Publication status | Published - Feb 2012 |
Keywords
- Life cycle happiness
- Subjective well-being
- Birth cohorts
- Time periods
- U-shape
- UNITED-STATES
- U-SHAPE
- HAPPINESS
- TIME
- AGE
- SATISFACTION
- ECONOMISTS
- INEQUALITY
- UTILITY
- COHORT