Life Satisfaction and Endogenous Aspirations

17 Pages Posted: 9 Jun 2015

See all articles by Marco Bertoni

Marco Bertoni

University of Padua

Luca Corazzini

University of Padua - Department of Economics; Bocconi University - Department of Economics

Date Written: June 2015

Abstract

Using data from the German Socio-Economic Panel (N = 13,145), we investigate the effects of (not) achieving aspirations on subjective well-being. We match individual-level data about life satisfaction aspirations with their subsequent realizations and we jointly estimate two panel-data equations, the first depicting the effects that (not) achieving initial aspirations exerts on the subsequent level of life satisfaction, and the second describing the endogenous adjustment process followed by aspirations as a function of beaten and unmet targets. We find that while achieving aspirations exerts weak effects on life satisfaction, failing to match aspired conditions significantly reduces subsequent realizations of life satisfaction. Moreover, our analysis supports a "hedonic adaptation" explanation of the previous results, as we find that aspirations significantly adjust to beaten targets, while they remain almost unchanged in case of unmet targets.

Keywords: Aspirations, Affective forecasts, Life Satisfaction, Hedonic Adaptation

JEL Classification: C99, C83, I31

Suggested Citation

Bertoni, Marco and Corazzini, Luca, Life Satisfaction and Endogenous Aspirations (June 2015). SOEPpaper No. 761. Available at SSRN: https://ssrn.com/abstract=2615768 or http://dx.doi.org/10.2139/ssrn.2615768

Marco Bertoni (Contact Author)

University of Padua ( email )

Luca Corazzini

University of Padua - Department of Economics ( email )

via Del Santo 33
Padova, 35123
Italy

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

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