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Choices Which Change Life Satisfaction: Similar Results for Australia, Britain and Germany

Author

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  • Bruce Headey
  • Ruud Muffels
  • Gert G. Wagner

Abstract

Using data from national socio-economic panel surveys in Australia, Britain and Germany, this paper analyzes the effects of individual preferences and choices on subjective well-being (SWB). It is shown that, in all three countries, preferences and choices relating to life goals/values, partner's personality, hours of work, social participation and healthy lifestyle have substantial and similar effects on life satisfaction. The results have negative implications for a widely accepted theory of SWB, set-point theory. This theory holds that adult SWB is stable in the medium and long term, although temporary fluctuations occur due to life events. Set-point theory has come under increasing criticism in recent years, primarily due to unmistakable evidence in the German Socio-Economic Panel that, during the last 25 years, over a third of the population has recorded substantial and apparently permanent changes in life satisfaction (Fujita and Diener, 2005; Headey, 2008a; Headey, Muffels and Wagner, 2010). It is becoming clear that the main challenge now for SWB researchers is to develop new explanations which can account for medium and long term change, and not merely stability in SWB. Set-point theory is limited precisely because it is purely a theory of stability. The paper is based on specially constructed panel survey files in which data are divided into multi-year periods in order to facilitate analysis of medium and long term change.

Suggested Citation

  • Bruce Headey & Ruud Muffels & Gert G. Wagner, 2010. "Choices Which Change Life Satisfaction: Similar Results for Australia, Britain and Germany," SOEPpapers on Multidisciplinary Panel Data Research 302, DIW Berlin, The German Socio-Economic Panel (SOEP).
    • Handle: RePEc:diw:diwsop:diw_sp302
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    References listed on IDEAS

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    1. Bruce Headey, 2008. "Life Goals Matter to Happiness: A Revision of Set-Point Theory," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 86(2), pages 213-231, April.
    2. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
    3. 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.
    4. Rainer Winkelmann, 2005. "Subjective well-being and the family: Results from an ordered probit model with multiple random effects," Empirical Economics, Springer, vol. 30(3), pages 749-761, October.
    5. Denis Gerstorf & Nilam Ram & Guy Mayraz & Mira Hidajat & Ulman Lindenberger & Gert G. Wagner & Jürgen Schupp, 2010. "Late-Life Decline in Well-Being across Adulthood in Germany, the UK, and the US: Something Is Seriously Wrong at the End of Life," SOEPpapers on Multidisciplinary Panel Data Research 286, DIW Berlin, The German Socio-Economic Panel (SOEP).
    6. Bruce Headey, 2006. "Subjective Well-Being: Revisions to Dynamic Equilibrium Theory using National Panel Data and Panel Regression Methods," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 79(3), pages 369-403, December.
    7. Bruce Headey, 2008. "The Set-Point Theory of Well-Being: Negative Results and Consequent Revisions," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 85(3), pages 389-403, February.
    8. 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.
    9. Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-116, March.
    10. Paul Frijters & John P. Haisken-DeNew & Michael A. Shields, 2004. "Money Does Matter! Evidence from Increasing Real Income and Life Satisfaction in East Germany Following Reunification," American Economic Review, American Economic Association, vol. 94(3), pages 730-740, June.
    11. Ulrich Schimmack & Richard Lucas, 2010. "Environmental Influences on Well-Being: A Dyadic Latent Panel Analysis of Spousal Similarity," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 98(1), pages 1-21, August.
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    More about this item

    Keywords

    set-point theory; life goals/values; individual choice; panel regression analysis; BHPS; HILDA; SOEP;
    All these keywords.

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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