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


Andrew Clark


Paris School of Economics (PSE); Institute for the Study of Labor (IZA)

Ed Diener


University of Illinois at Urbana-Champaign

Yannis Georgellis


University of Kent, Canterbury - Kent Business School

Richard E. Lucas


Michigan State University

December 2006

IZA Discussion Paper No. 2526

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.

Number of Pages in PDF File: 32

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

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

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Date posted: January 15, 2007  

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: http://ssrn.com/abstract=956920

Contact Information

Andrew Eric Clark (Contact Author)
Paris School of Economics (PSE) ( email )
48 Boulevard Jourdan
Paris, 75014 75014
France
Institute for the Study of Labor (IZA)
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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