The association between income dynamics and subjective well-being: Evidence from career income records in Japan

Takashi Oshio, 隆士 小塩, Maki Umeda, 麻希 梅田, Mayu Fujii and 麻由 藤井

No 564, CIS Discussion paper series from Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University

Abstract: In this analysis, we attempted to investigate how subjective well-being (SWB) was associated with income dynamics for male employees in Japan (N = 1,004), on the basis of a panel dataset of career wage records covering a period of more than 30 years. It is widely recognized that income is a key determinant of SWB, along with other variables of socioeconomic status. We focused on the association of income dynamics with life satisfaction, its expectation five years later, self-rated health (SRH), and psychological distress. The history of income used in our analysis was based on administrative records, which were almost free from recall errors. Results showed that life satisfaction was more strongly affected by a change from lifetime average or maximum income than from income in the previous year, while the opposite was true of SRH and psychological distress. In addition, life satisfaction had a downward stickiness against a reduction in income from its average or maximum level, which was not the case for SRH or psychological distress. Further, the experience of peak out of income in the past made SWB more sensitive to changes in income. These findings suggest that the association between SWB and income should be further studied in a dynamic framework.

Keywords: Subjective well-being; Life satisfaction; Self-rated health; Psychological distress; Income dynamics (search for similar items in EconPapers)
Pages: 30 pages
Date: 2012-07
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Citations: View citations in EconPapers (1)

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