What (If Anything) Do Satisfaction Scores Tell Us About the Intertemporal Change in Living Conditions?

15 Pages Posted: 3 Aug 2010

See all articles by Christoph Wunder

Christoph Wunder

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Department of Economics; University of Bamberg

Johannes Schwarze

University of Bamberg; German Institute for Economic Research (DIW Berlin); IZA Institute of Labor Economics

Date Written: July 2010

Abstract

This paper looks at the information content of satisfaction scores. It is argued that the information content depends on the extent to which people adapt to living conditions in general. Using data from the German Socio-Economic Panel Study (SOEP), the estimation of a dynamic panel data model provides evidence that adaptation takes place within a relatively short window of time: changes in living conditions are, for the most part, absorbed by an adjustment of the adaptation level within one year. This leads to the conclusion that the information content of satisfaction scores accentuates recent change.

Keywords: adaptation, dynamic panel data model, subjective well-being, satisfaction

JEL Classification: C23, I31

Suggested Citation

Wunder, Christoph and Schwarze, Johannes, What (If Anything) Do Satisfaction Scores Tell Us About the Intertemporal Change in Living Conditions? (July 2010). SOEPpaper No. 306, Available at SSRN: https://ssrn.com/abstract=1645901 or http://dx.doi.org/10.2139/ssrn.1645901

Christoph Wunder (Contact Author)

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Department of Economics ( email )

Lange Gasse 20
Nuernberg, D-90403
Germany

University of Bamberg ( email )

Feldkirchenstr. 21
Bamberg 96045
Germany

Johannes Schwarze

University of Bamberg ( email )

Kirschaeckerstrasse 39
Bamberg 96045
Germany
+49 951 863 2600 (Phone)
+49 951 863 5569 (Fax)

German Institute for Economic Research (DIW Berlin)

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Berlin, 10117
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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