Choices Which Change Life Satisfaction – Revising SWB Theory to Account for Change
33 Pages Posted: 20 Jun 2013
Date Written: May 2010
Using data from the long-running German Socio-Economic Panel (SOEP) from 1984 to 2008, this paper analyzes the effects of individual preferences and choices on subjective well-being (SWB). It is shown that preferences and choices relating to life goals/values, partner’s personality, hours of work, social participation, and healthy lifestyle all have substantial effects on life satisfaction. The results have negative implications for the still dominant theory of SWB, set-point theory. This theory holds that adult SWB does not change in the medium or long term, although temporary fluctuations occur due to specific life events. Set-point theory has come under increasing criticism in recent years, primarily due to unmistakable evidence in SOEP that, during the last 25 years, up to a third of the population has recorded substantial and apparently permanent changes in life satisfaction. It is becoming clear that the main challenge now for SWB researchers is to develop a new theory which can account for medium and long term change, and not merely stability in SWB. Set-point theory is limited precisely because it is purely a theory of stability. The paper is based on a specially constructed SOEP file in which data are divided into five 5-year periods in order to facilitate analysis of medium term change.
Keywords: subjective well-being, SWB, set-point theory, life goals, individual choice, panel regression analysis, SOEP
JEL Classification: I31, J1, Z13
Suggested Citation: Suggested Citation