Happiness Adaptation to Income and to Status in an Individual Panel
40 Pages Posted: 26 Jul 2005
There are 2 versions of this paper
Happiness Adaptation to Income and to Status in an Individual Panel
Happiness Adaptation to Income and to Status in an Individual Panel
Date Written: 2004
Abstract
Happiness data can help in evaluating the economic importance of "behavioural" theories. Using individual panel data on up to 7,812 people living in Germany from 1984 to 2000, we illustrate the approach by estimating the size of the effect on happiness of adaptation to income and to status. We cannot reject the null hypothesis that people adapt totally to income after four years. By comparison, significant status effects remain after this time. In the short-run (current year) a one standard deviation increase in status is associated with a similar increase in happiness to an increase of 49% of a standard deviation in income. In the long run (past four years) a one standard deviation increase in status has a similar effect to an increase of 328% of a standard deviation in income. We also discuss some evidence consistent with loss aversion.
Keywords: Happiness, psychology, adaptation to income, adaptation to status
JEL Classification: I31, D0
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Relative Income, Happiness and Utility: An Explanation for the Easterlin Paradox and Other Puzzles
By Andrew Clark, Paul Frijters, ...
-
Does Marriage Make People Happy, or Do Happy People Get Married?
By Alois Stutzer and Bruno S. Frey
-
Does Happiness Adapt? A Longitudinal Study of Disability with Implications for Economists and Judges
-
Happiness Adaptation to Income and to Status in an Individual Panel
By Rafael Di Tella, John De New, ...
-
Does Wage Rank Affect Employees' Wellbeing?
By Gordon D. A. Brown, Jonathan Gardner, ...
-
Do Divorcing Couples Become Happier by Breaking Up?
By Jonathan Gardner and Andrew J. Oswald
-
Heterogeneity in Reported Well-Being: Evidence from Twelve European Countries
By Andrew Clark, Fabrice Etile, ...