A test for the convexity of human well-being over the life cycle: longitudinal evidence from a 20-year panel

B.G.M. van Landeghem

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16 Citations (Scopus)

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 languageEnglish
Pages (from-to)571-582
Number of pages12
JournalJournal of Economic Behavior & Organization
Volume81
Issue number2
DOIs
Publication statusPublished - 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

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