Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis

32 Pages Posted: 15 Jan 2007  

Andrew Clark

Paris School of Economics (PSE); IZA Institute of Labor Economics

Ed Diener

University of Illinois at Urbana-Champaign

Yannis Georgellis

University of Kent, Canterbury - Kent Business School

Richard E. Lucas

Michigan State University

Multiple version iconThere are 2 versions of this paper

Date Written: December 2006

Abstract

We look for evidence of habituation in twenty waves of German panel data: do individuals, after life and labour market events, tend to return to some baseline level of wellbeing? Although the strongest life satisfaction effect is often at the time of the event, we find significant lag and lead effects. We conclude that there is complete adaptation to divorce, widowhood, birth of first child, and layoff. However, adaptation to marriage is only incomplete, and there is no adaptation to unemployment for men. In general, men are more affected by labour market events (unemployment and layoffs) than are women. Last, we find no consistent evidence that happiness provides insurance against hard knocks: those with high and low baseline satisfaction levels are broadly equally affected by labour market and life events.

Keywords: life satisfaction, anticipation, habituation, baseline satisfaction, labour market and life events

JEL Classification: I31, J12, J13, J63, J64

Suggested Citation

Clark, Andrew and Diener, Ed and Georgellis, Yannis and Lucas, Richard E., Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis (December 2006). IZA Discussion Paper No. 2526. Available at SSRN: https://ssrn.com/abstract=956920

Andrew Eric Clark (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Ed Diener

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

Yannis Georgellis

University of Kent, Canterbury - Kent Business School ( email )

Canterbury, Kent CT2 7PE
United Kingdom

Richard E. Lucas

Michigan State University ( email )

Agriculture Hall
East Lansing, MI 48824-1122
United States

HOME PAGE: http://www.msu.edu/user/lucasri/

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