Individual Well-Being in a Dynamic Perspective
24 Pages Posted: 11 Mar 2007
Date Written: February 2007
This paper explores the determinants of individual well-being as measured by self-reported levels of satisfaction with income. Making full use of the panel data nature of the German Socio-Economic Panel, we provide empirical evidence for well-being depending on absolute and on relative levels of income in a dynamic framework. This finding holds after controlling for other influential factors in a multivariate setting. The main novelty of the paper is the consideration of dynamic aspects: individual's own history as well as the relative income performance with respect to the others living in the society under analysis do play a major role in the assessment of well-being.
Keywords: interdependent preferences, inequality aversion, status, subjective well-being, SOEP
JEL Classification: D63, I31, D31
Suggested Citation: Suggested Citation