Happiness and the Persistence of Income Shocks

Falko Jüßen and Christian Bayer
Authors registered in the RePEc Author Service: Falko Juessen

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: We reassess the empirical effects of income and employment on self-reported well-being. Our analysis makes use of a two-step estimation procedure that allows applying instrumental variable regressions with ordinal observable data. As suggested by the theory of incomplete markets, we differentiate between the effects of persistent and transitory income shocks. In line with this theory, we find that persistent shocks have a significant impact on happiness while transitory shocks do not. This has consequences also for inference about the happiness effect of employment. We find that employment per se is rather associated with a decline in happiness.

JEL-codes: D12 D60 E21 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-hap and nep-mac
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Related works:
Journal Article: Happiness and the Persistence of Income Shocks (2015)
Working Paper: Happiness and the Persistence of Income Shocks (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc13:79915

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