What Can Happiness Research Tell Us About Altruism? Evidence from the German Socio-Economic Panel

Abstract

Much progress has been made in recent years on developing and applying a direct measure of utility using survey questions on subjective well-being. In this paper we explore whether this new type of measurement can be fruitfully applied to the study of interdependent utility in general, and altruism between parents and children in particular. We introduce an appropriate econometric methodology and, using data from the German Socio-Economic Panel for the years 2000-2002, find that the parents' self-reported happiness depends positively, albeit not very strongly, on the happiness of adult children who moved out.

Keywords: utility function, extended family, fixed effects, ordered probit

JEL Classification: D6, D64, C25, J10