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Does subjective well-being dynamically adjust to circumstances?

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  • Wunder, Christoph

Abstract

This paper introduces a simple model to estimate the dynamic adjustment of subjective well-being that results from an updating of expectations in response to changing circumstances. Empirical evidence indicates that adjustment takes place within a relatively short window of time.

Suggested Citation

  • Wunder, Christoph, 2012. "Does subjective well-being dynamically adjust to circumstances?," Economics Letters, Elsevier, vol. 117(3), pages 750-752.
    • Handle: RePEc:eee:ecolet:v:117:y:2012:i:3:p:750-752
    DOI: 10.1016/j.econlet.2012.08.024
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    References listed on IDEAS

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    1. Carol Newman & Liam Delaney & Brian Nolan, 2008. "A Dynamic Model of the Relationship Between Income and Financial Satisfaction: Evidence from Ireland," The Economic and Social Review, Economic and Social Studies, vol. 39(2), pages 105-130.
    2. Andrew E. Clark & Ed Diener & Yannis Georgellis & Richard E. Lucas, 2008. "Lags And Leads in Life Satisfaction: a Test of the Baseline Hypothesis," Economic Journal, Royal Economic Society, vol. 118(529), pages 222-243, June.
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    4. Bottan, Nicolas Luis & Perez Truglia, Ricardo, 2011. "Deconstructing the hedonic treadmill: Is happiness autoregressive?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(3), pages 224-236, May.
    5. Easterlin, Richard A., 2005. "A puzzle for adaptive theory," Journal of Economic Behavior & Organization, Elsevier, vol. 56(4), pages 513-521, April.
    6. 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.
    7. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    8. Van Praag, Bernard M. S. & Kapteyn, Arie, 1973. "Further evidence on the individual welfare function of income: An empirical investigatiion in The Netherlands," European Economic Review, Elsevier, vol. 4(1), pages 33-62, April.
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    Citations

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    Cited by:

    1. Daniel Kuehnle & Christoph Wunder, 2016. "Using the Life Satisfaction Approach to Value Daylight Savings Time Transitions: Evidence from Britain and Germany," Journal of Happiness Studies, Springer, vol. 17(6), pages 2293-2323, December.
    2. Piper, Alan T., 2018. "Adult life satisfaction: largely (though not wholly) contemporaneous? A System General Method of Moments dynamic panel analysis," MPRA Paper 85601, University Library of Munich, Germany.
    3. repec:hal:journl:hal-04799394 is not listed on IDEAS
    4. Ayllón, Sara & Fusco, Alessio, 2017. "Are income poverty and perceptions of financial difficulties dynamically interrelated?," Journal of Economic Psychology, Elsevier, vol. 61(C), pages 103-114.
    5. Piper, Alan T., 2013. "Happiness, Dynamics and Adaptation," MPRA Paper 52342, University Library of Munich, Germany.
    6. David W. Johnston & Olena Stavrunova, 2021. "Subjective Wellbeing Dynamics," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(4), pages 518-529, December.
    7. Mario Bossler & Sandra Broszeit, 2017. "Do minimum wages increase job satisfaction? Micro-data evidence from the new German minimum wage," LABOUR, CEIS, vol. 31(4), pages 480-493, December.
    8. Lionel WILNER, 2019. "The Dynamics of Individual Happiness," Working Papers 2019-18, Center for Research in Economics and Statistics.
    9. Edsel Beja, 2014. "Income growth and happiness: reassessment of the Easterlin Paradox," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 61(4), pages 329-346, December.
    10. Piper, Alan T., 2014. "The Benefits, Challenges and Insights of a Dynamic Panel assessment of Life Satisfaction," MPRA Paper 59556, University Library of Munich, Germany.
    11. Piper, Alan T., 2014. "An Investigation into Happiness, Dynamics and Adaptation," MPRA Paper 57778, University Library of Munich, Germany.
    12. FUSCO Alessio, 2013. "The dynamics of perceived financial difficulties," LISER Working Paper Series 2013-24, Luxembourg Institute of Socio-Economic Research (LISER).
    13. Beja, Edsel Jr., 2018. "Testing the Easterlin Paradox: Results and Policy Implications," MPRA Paper 101075, University Library of Munich, Germany.
    14. Edsel L. Beja Jr., 2018. "Testing the easterlin paradox: Results and policy implications," Journal of Behavioral Economics for Policy, Society for the Advancement of Behavioral Economics (SABE), vol. 2(2), pages 79-83, September.
    15. Marcus Klemm, 2022. "Well-being Changes from Year to Year: A Comparison of Current, Remembered and Predicted Life Satisfaction," Journal of Happiness Studies, Springer, vol. 23(4), pages 1669-1681, April.
    16. Alan Piper, 2018. "Adult life satisfaction largely (though not wholly) contemporaneous," Discussion Papers 028, Europa-Universität Flensburg, International Institute of Management.

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    More about this item

    Keywords

    Subjective well-being; Adaptation level; Dynamic panel data model;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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