Income, Happiness, and the Disutility of Labour

Andreas Knabe and Steffen Rätzel

No 9010, FEMM Working Papers from Otto-von-Guericke University Magdeburg, Faculty of Economics and Management

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; Working Hours (search for similar items in EconPapers)
JEL-codes: D60 I31 J01 (search for similar items in EconPapers)
Pages: 7 pages
Date: 2009-03
New Economics Papers: this item is included in nep-hap and nep-lab
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Related works:
Journal Article: Income, happiness, and the disutility of labour (2010)
Working Paper: Income, happiness, and the disutility of labor (2009)
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