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A test for the convexity of human well-being over the life cycle: longitudinal evidence from a 20-year panel

Tijdschriftbijdrage - Tijdschriftartikel

A huge cross-section literature, written by economists and others, argues that human wellbeing is U-shaped through the life cycle. In many cases this U-shape is robust (with a wellknown exception the pattern evident in some U.S. data sets if few independent variables are included). However, a lively debate is currently ongoing about its true shape. This paper discusses the identification problem of age, time, and cohort effects. It suggests a simple way to interpret estimates of age variables in a first-difference framework. Building on McKenzie’s (2006) methodology, the paper shows that no extra assumptions are needed in order to identify the second derivative of well-being to age, i.e. to estimate the changes in the actual age and well-being relationship. An empirical application, using a large German data set, finds that human well-being is convex in age until after midlife, which is approximately consistent with a U-shaped pattern through life, and not with the concave relationship sometimes found in U.S. studies.
Tijdschrift: Journal of Economic Behavior & Organization
ISSN: 0167-2681
Issue: 2
Volume: 81
Pagina's: 571 - 582
Jaar van publicatie:2012
BOF-keylabel:ja
IOF-keylabel:ja
BOF-publication weight:1
CSS-citation score:2
Authors from:Higher Education
Toegankelijkheid:Open