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Testing the tunnel effect: comparison, age and happiness in UK and German panels

Year: 2014

Type: article

Abstract: In contrast to previous results combining all ages, we findpositiveeffects of comparison income on happiness for the under 45s and negative effects for those over 45. In the UK, these coefficients are several times the magnitude of own income effects. In West Germany, they cancel out to givenoeffect of comparison income on life satisfaction in the whole sample when controlling for fixed effects, time-in-panel, and age-groupings. Pooled OLS estimation gives the usual negative comparison effect in the whole sample for both West Germany and the UK. The residual age-happiness relationship is hump-shaped in all three countries. Results are consistent with a simple life cycle model of relative income under uncertainty. Jel codes D10, I31, J10

Source: IZA Journal of European Labor Studies

DOI: 10.1186/2193-9012-3-24

Authors: Felix R FitzRoy, Michael A Nolan, Max F Steinhardt, David Ulph

Institutions: University of St Andrews, University of Hull, Helmut Schmidt University

Language: English

Topic: Psychological Well-being and Life Satisfaction

Subfield: Social Psychology

Field: Psychology

Domain: Social Sciences

SDGs: Decent work and economic growth, Reduced inequalities

Open Access status: hybrid

Funder: Royal Economic Society