Testing the tunnel effect: comparison, age and happiness in UK and German panels

Felix R FitzRoy; Michael Nolan; Max  Steinhardt; David Tregear Ulph

doi:10.1186/2193-9012-3-24

Testing the tunnel effect: comparison, age and happiness in UK and German panels

Felix R FitzRoy, Michael Nolan, Max Steinhardt, David Tregear Ulph

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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 UK, these coefficients are several times the magnitude of own income effects. In West Germany, they cancel out to give no effect of comparison income on life satisfaction in the whole sample when controlling for fixed effects, time-in-panel, and age-groupings. Pooled OLS estimation gives the usual negative comparison effect in the whole sample for both West Germany and the UK. 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.

Original language	English
Article number	24
Journal	IZA Journal of European Labor Studies
Volume	3
DOIs	https://doi.org/10.1186/2193-9012-3-24
Publication status	Published - 30 Dec 2014

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 15 Life on Land

Keywords

Subjective life-satisfaction
Comparison income
Reference groups
Age
Welfare

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10.1186/2193-9012-3-24

2193-9012-3-24
© 2014 FitzRoy et al.; licensee Springer. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly credited.
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title = "Testing the tunnel effect: comparison, age and happiness in UK and German panels",

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 UK, these coefficients are several times the magnitude of own income effects. In West Germany, they cancel out to give no effect of comparison income on life satisfaction in the whole sample when controlling for fixed effects, time-in-panel, and age-groupings. Pooled OLS estimation gives the usual negative comparison effect in the whole sample for both West Germany and the UK. 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. ",

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T2 - comparison, age and happiness in UK and German panels

AU - FitzRoy, Felix R

AU - Nolan, Michael

AU - Steinhardt, Max

AU - Ulph, David Tregear

PY - 2014/12/30

Y1 - 2014/12/30

N2 - 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 UK, these coefficients are several times the magnitude of own income effects. In West Germany, they cancel out to give no effect of comparison income on life satisfaction in the whole sample when controlling for fixed effects, time-in-panel, and age-groupings. Pooled OLS estimation gives the usual negative comparison effect in the whole sample for both West Germany and the UK. 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.

AB - 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 UK, these coefficients are several times the magnitude of own income effects. In West Germany, they cancel out to give no effect of comparison income on life satisfaction in the whole sample when controlling for fixed effects, time-in-panel, and age-groupings. Pooled OLS estimation gives the usual negative comparison effect in the whole sample for both West Germany and the UK. 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.

KW - Subjective life-satisfaction

KW - Comparison income

KW - Reference groups

KW - Age

KW - Welfare

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UR - https://www.scopus.com/pages/publications/84983243537

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DO - 10.1186/2193-9012-3-24

M3 - Article

SN - 2193-9012

VL - 3

JO - IZA Journal of European Labor Studies

JF - IZA Journal of European Labor Studies

M1 - 24

ER -

Testing the tunnel effect: comparison, age and happiness in UK and German panels

Abstract

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Keywords

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