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Testing the Tunnel Effect: Comparison, Age and Happiness in UK and German Panels

Felix FitzRoy, Michael A. Nolan (), Max Steinhardt () and David Ulph ()
Additional contact information
Michael A. Nolan: University of Hull
David Ulph: University of St. Andrews

No 7452, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In contrast to previous results combining all ages we find positive effects of comparison income on happiness for the under 45s, and negative effects for those over 45. In the BHPS these coefficients are several times the magnitude of own income effects. In GSOEP they cancel to give no effect of effect of comparison income on life satisfaction in the whole sample, when controlling for fixed effects, and time-in-panel, and with flexible, age-group dummies. 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.

Keywords: welfare; reference groups; age; comparison income; subjective life-satisfaction (search for similar items in EconPapers)
JEL-codes: D10 I31 J10 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age, nep-dem, nep-eur and nep-hap
Date: 2013-06
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Published in: IZA Journal of European Labor Studies, 2014, 3, 24.

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Related works:
Journal Article: Testing the tunnel effect: comparison, age and happiness in UK and German panels (2014) Downloads
Working Paper: Testing the Tunnel Effect: Comparison, Age and Happiness in UK and German Panels (2013) Downloads
Working Paper: Testing the Tunnel Effect: Comparison, Age and Happiness in UK and German Panels (2013) Downloads
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