Born to Be Mild? Cohort Effects Don't (Fully) Explain Why Well-Being is U-Shaped in Age

Abstract

The statistical analysis of cross-section data very often reveals a U-shaped relationship between subjective well-being and age. This paper uses fourteen waves of British panel data to distinguish between two potential explanations of this shape: a pure life-cycle or aging effect, and a fixed cohort effect depending on year of birth. Panel analysis controlling for fixed effects continues to produce a U-shaped relationship between well-being and age, although this U-shape is flatter for life satisfaction than for the GHQ measure of mental well-being. The pattern of the estimated cohort effects also differs between the two well-being measures and, to an extent, by demographic group. In particular, those born earlier report more positive GHQ scores, controlling for their current age; this phenomenon is especially prevalent for women.

Keywords: subjective well-being, cohorts, fixed effects, panel data

JEL Classification: C23, I3, J11