Endogeneity in the Relation between Poverty, Wealth and Life Satisfaction

18 Pages Posted: 29 Nov 2013

Date Written: November 2013


This publication concentrates on the complex interplay between poverty, wealth and life satisfaction. Main areas of life are quantified in a multidimensional approach of poverty and wealth: Individual income, current health, occupational autonomy or employment status and also the mentioned life satisfaction. Data used in this publication were made available by the German Socio Economic Panel Study (SOEP) at the German Institute for Economic Research (DIW Berlin), Berlin. A period from 1998-2009 is examined. This study has two main goals: (1) To contribute to the interconnection between poverty, wealth and life satisfaction. (2) Besides, the endogeneity research regarding life satisfaction should be expanded. Reduced form vector-autoregressions (with first differences) were used to answer the questions. Therefore, granger-causality can be supposed. Major findings: An initial rise in life satisfaction can improve income and health, but not job autonomy. However, even the probability of returning from unemployment to employment can increase. Gender-specific differences are discussed.

Keywords: life satisfaction, unemployment, SOEP, vector autoregressions, endogeneity, income, health, occupational autonomy

JEL Classification: I19, I31, I32, J64

Suggested Citation

Hajek, André, Endogeneity in the Relation between Poverty, Wealth and Life Satisfaction (November 2013). SOEPpaper No. 604. Available at SSRN: https://ssrn.com/abstract=2361001 or http://dx.doi.org/10.2139/ssrn.2361001

André Hajek (Contact Author)

Independent ( email )

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United States

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