Predicting the Trend of Well-Being in Germany: How Much Do Comparisons, Adaptation and Sociability Matter?
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Predicting the Trend of Well-Being in Germany: How Much Do Comparisons, Adaptation and Sociability Matter? Stefano Bartolini • Ennio Bilancini • Francesco Sarracino
Accepted: 22 August 2012 Springer Science+Business Media B.V. 2012
Abstract Using longitudinal data from the German Socio-Economic Panel, we estimate the variation of subjective well-being experienced by Germans over the last two decades testing the role of some of the major correlates of people’s well-being. Our results suggest that the variation of Germans’ well-being between 1996 and 2007 is well predicted by changes over time of income, demographics and social capital. The increase in social capital predicts the largest positive change in subjective well-being. Income growth, also predicts a substantial change in subjective well-being, but it is compensated for about three fourths by the joint negative predictions due to income comparison and income adaptation. Finally, we find that aging of the population predicts the largest negative change in subjective well-being. This result appears to hinge on the large loss of satisfaction experienced by individuals in old age. Keywords Subjective well-being Life satisfaction Social capital Sociability Relational goods Relative income Social comparisons Income adaptation SOEP
1 Introduction In this paper we estimate the overall variation of German subjective well-being (SWB) between 1996 and 2007, as it is predicted by the changes over time in each of its statically
S. Bartolini Department of Economics, University of Siena, Siena, Italy S. Bartolini F. Sarracino Population et emploi, CEPS/INSTEAD, Luxembourg, Luxembourg E. Bilancini (&) Department of Economics, University of Modena and Reggio Emilia, Modena and Reggio Emilia, Italy e-mail: [email protected]
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significant correlates. Our aim is to assess the relative importance of each SWB correlate in explaining the trend of German SWB. Strong interest in the trends of SWB has been motivated by one astonishing stylized fact:1 the lack of substantial growth of SWB in the long-term in many important Western countries. For instance, decades-long time series suggest that SWB did not increase significantly in US, UK and Germany (Easterlin 1974; Blanchflower and Oswald 2004; Layard and Nickell 2009, see). This evidence is surprising and disappointing if considered in the light of the dramatic economic growth experienced by Western countries during post-World War II. Available evidence at the micro-level confirms the predictions of economic theory regarding the positive relationship between individuals’ well-being and income. Indeed, at any point in time individuals with higher incomes report, on average, a higher SWB (Easterlin 1974). So, why does not the average well-being grow when the average income grows? Such a contrast between cross-sectional evidence and time series evidence may seem paradoxical, and in fact it has been labelled as the ‘‘Easterlin paradox’’. What does explain such a paradox? Two non-
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