Income, happiness, and the disutility of labor

Andreas Knabe and Steffen Rätzel

No 2009/12, Discussion Papers from Free University Berlin, School of Business & Economics

Abstract: We reexamine the claim that the effect of income on subjective well-being suffers from a systematic downward bias if one ignores that higher income is typically associated with more work effort. We analyze this claim using German panel data, controlling for individual unobserved heterogeneity, and specifying the impact of working hours in a non-monotonic form. Our results suggest that the impact of working hours on happiness is rather small and exhibits an inverse U-shape. We do not find evidence that leaving working hours out of the analysis leads to an underestimation of the income effect.

Keywords: Happiness; life satisfaction; income; disutility of labor (search for similar items in EconPapers)
JEL-codes: D60 I31 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-hap, nep-lab and nep-mic
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Related works:
Journal Article: Income, happiness, and the disutility of labour (2010)
Working Paper: Income, Happiness, and the Disutility of Labour (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:fubsbe:200912

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