Download this Paper Open PDF in Browser

You Don‘t Know What You‘ve Got Till It‘s Gone! Unemployment and Intertemporal Changes in Self-Reported Life Satisfaction

Ruhr Economic Papers No. 297

34 Pages Posted: 8 Dec 2011  

Marcus Klemm

University of Dortmund - Ruhr Graduate School in Economics; Ruhr University Bochum - Faculty of Economics

Date Written: December 1, 2011

Abstract

This paper uses concurrently and – for the first time – retrospectively reported life satisfaction from the 1984 to 1987 waves of the German Socio-Economic Panel to study the importance of different comparison standards for the empirical correlation of unemployment and subjective life satisfaction. It is found that unemployed individuals do not only report significantly lower concurrent satisfaction, but also recall reduced satisfaction from past unemployment well, and retrospectively upgrade their past satisfaction scores. Therefore, the short-term negative effects of unemployment on individual life satisfaction reported in the literature so far are likely underestimated. At the same time, the empirical findings cast doubts on the usefulness of subjective life satisfaction for the precise quantification of welfare effects because of changing comparison standards which greatly limit the intertemporal comparability of the data. For this reason, such data also appear to be of limited use for monitoring long-term economic or social development.

Keywords: life satisfaction, well-being, unemployment, longitudinal and retrospective studies

JEL Classification: C23, C81, I31, J64

Suggested Citation

Klemm, Marcus, You Don‘t Know What You‘ve Got Till It‘s Gone! Unemployment and Intertemporal Changes in Self-Reported Life Satisfaction (December 1, 2011). Ruhr Economic Papers No. 297. Available at SSRN: https://ssrn.com/abstract=1969788 or http://dx.doi.org/10.2139/ssrn.1969788

Marcus Klemm (Contact Author)

University of Dortmund - Ruhr Graduate School in Economics ( email )

Hohenzollernstr. 1-3
Essen, NRW 45128
Germany

HOME PAGE: http://www.rgs-econ.org

Ruhr University Bochum - Faculty of Economics ( email )

Ruhr University of Bochum
Faculty of Economics
D-44780 Bochum, DE 44780
Germany

HOME PAGE: http://www.economics.rub.de

Paper statistics

Downloads
4
Abstract Views
111