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How well do individuals predict their future life satisfaction? Evidence from panel data following a nationwide exogenous shock

Paul Frijters (), Harry Greenwell, John P. Haisken‐DeNew and Michael Shields
Authors registered in the RePEc Author Service: John P. de New

Canadian Journal of Economics/Revue canadienne d'économique, 2009, vol. 42, issue 4, 1326-1346

Abstract: Abstract Using German panel data, we investigate how well individuals predict their own future life satisfaction. The context is the decade following the 1990 reunification of Germany, which provided a large shock to the future prospects of the inhabitants of the former East Germany. We find that the majority of East Germans significantly overestimated the satisfaction gains from reunification in the years immediately after transition, but by 1994 had converged on correct aggregate expectations. Some evidence of micro‐heterogeneity in the prediction errors is found by age and education. For West Germans, we find some initial over‐optimism, although less than for East Germans. Les auteurs examinent avec quelle exactitude les individus prédisent leur propre satisfaction future dans la vie à l'aide de données de panel. Le contexte est la décennie qui a suivi la réunification de l'Allemagne en 1990 – réunification qui a produit un grand choc dans les perspectives d'avenir des habitants de l'ancienne Allemagne de l'Est. On découvre que la majorité des Allemands de l'Est ont surestimé de manière significative les gains de satisfaction à cause de la réunification dans les années qui ont suivi immédiatement la transition. Mais à partir de 1994, il y a eu convergence vers des expectatives agrégées plus réalistes. Les résultats montrent une certaine micro‐hétérogénéité des erreurs de prévision selon l'âge et le niveau d'éducation. Pour les Allemands de l'Ouest, il y a eu sur‐optimisme initialement, mais moins que pour les Allemands de l'Est.

Date: 2009
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