Individual Well-Being in a Dynamic Perspective

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

D'Ambrosio, Conchita and Frick, Joachim R., Individual Well-Being in a Dynamic Perspective (February 2007). IZA Discussion Paper No. 2618, SOEP Paper No. 5, Available at SSRN: https://ssrn.com/abstract=969617 or http://dx.doi.org/10.2139/ssrn.969617