Life Satisfaction, Income and Personality Theory

Life Satisfaction, Income and Personality Theory
Eugenio Protoa Aldo Rustichinib
aDepartment of Economics, University of Warwick
bDepartment of Economics, University of Minnesota
September 2011

Abstract: Neuroticism is responsible for the decline of happiness with high income and its increase for lower incomes in both SOEP and BHPS datasets. We suggest that the e ect is due to the psychological cost of the gap between aspiration and realized income. High income individuals fail to meet expectation, this explains lower increase or decrease of life satisfaction for highly neurotic individuals for higher income levels. Data show a hump-shaped relation between income and life satisfaction, with a bliss point between 250-300K 2005 USD. For highly neurotic this peak occurs at lower income, and disappears for non neurotic individuals.

JEL classi cation: D03; D870; C33.
Keywords: Life Satisfaction, Income, Personality Theory, Neuroticism.

The OECD and Well-being

The OECD is organising a conference in Paris on 12 October 2011 on "Two Years after the Stiglitz-Sen-Fitoussi Report":

http://www.oecd.org/site/0,3407,en_21571361_48428993_1_1_1_1_1,00.html

Some interesting OECD related links:
Better Life Initiative: http://www.oecdbetterlifeindex.org/
Measuring Progress: www.oecd.org/measuringprogress
wikiprogress: http://www.wikiprogress.org/

The Stiglitz-Sen-Fitoussi Report is very much a must-read on the topic: http://www.stiglitz-sen-fitoussi.fr/documents/rapport_anglais.pdf

The negative effect of height on well-being: a tall story?

Height and well-being amongst older Europeans
Kevin Denny

This paper uses a cross-country representative sample of Europeans over the age of 50 to analyse whether individuals’ height is associated with higher or lower levels of well-being. Two outcomes are used: a measure of depression symptoms reported by individuals and a categorical measure of life satisfaction. It is shown that there is a concave relationship between height and symptoms of depression. These results are sensitive to the inclusion of several sets of controls reflecting demographics, human capital and health status. While parsimonious models suggest that height is protective against depression, the addition of controls, particularly related to health, suggests the reverse effect: tall people are predicted to have slightly more symptoms of depression. Height has no significant association with life satisfaction in models with controls for health and human capital.

Here also