An Investigation into Happiness, Dynamics and Adaptation

This investigation discusses and employs dynamic panel analysis to provide new insights into the concept of happiness, and particularly its dynamics. Arguments are advanced for its use both in terms of the advantages such analysis offers, and also because it takes into account dynamics omitted by more standard panel data estimation methods like fixed effects. Using the British Household Panel Survey, it is demonstrated that happiness is largely (but not wholly) contemporaneous. This helps to provide explanations for previous findings, inform the adaptation discussion, and generate new understanding regarding well-being. An event – no matter when entered into - must have a contemporaneous impact on either the life of an individual or an individual’s perception of their life (or both) for it to be reflected in self-reported life satisfaction scores. Similarly, this contemporaneous finding also explains other results in the literature about the well-being legacy of events.