Towards a Theory of Medium Term Life Satisfaction: Two-Way Causation Partly Explains Persistent Satisfaction or Dissatisfaction

Bruce Headey () and Ruud Muffels
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Bruce Headey: University of Melbourne

Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, 2016, vol. 129, issue 2, No 24, 937-960

Abstract: Abstract Long term panel data enable researchers to construct trajectories of life satisfaction (LS) for individuals over time. In this paper we analyse the trajectories of respondents (N = 3689) in the German Socio-Economic Panel who recorded their LS for 20 consecutive years in 1991–2010. Previous research has shown that at least a quarter of these respondents recorded substantial long term changes in LS (Headey et al. in Proc Natl Acad Sci 107.42:17922–17926, 2010a, in Soc Indic Res 112:725–748, 2013). In this paper, graphs of LS trajectories, and subsequent statistical analysis, show that respondents tend to spend multiple consecutive years above and, in other periods, below their own 20-year mean level of LS. They experience extended ‘good times’ and extended ‘bad times’. These results are contrary to set-point theory which views LS as stable, except for short term fluctuations due to life events. In the later part of the paper we attempt to move towards a theory of medium term life satisfaction. We estimate structural equation models with two-way causation between LS and variables usually treated as causes of LS, including health, physical exercise, frequency of social activities, and satisfaction with work and leisure. Results are interpreted as showing positive feedback loops between these variables and LS, accounting for extended periods of high or low LS. The models are based on a modified concept of ‘Granger-causation’ (Granger in Econometrica 37:424–438, 1969). The main intuition behind Granger-causation is that if x can be shown to be statistically significantly related to y in a model which includes multiple lags of y, then it can be inferred that x is one cause of y.

Keywords: Life satisfaction trajectories; Set-point theory; Two-way causation; Positive feedback loops; Granger-causation (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s11205-015-1146-8

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