The mystery of the U-shaped relationship between happiness and age

In this paper, we address the puzzle of the relationship between age and happiness. Whilst the majority of psychologists have concluded there is not much of a relationship at all, the economic literature has unearthed a possible U-shape relationship with the minimum level of satisfaction occurring i...

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Bibliographic Details
Published in:Journal of economic behavior & organization 2012-05, Vol.82 (2-3), p.525-542
Main Authors: Frijters, Paul, Beatton, Tony
Format: Article
Language:English
Subjects:
Age
Age effects
Australia
Correlation analysis
Economic theory
Effects
Fixed effects
Germany
Happiness
Happiness methodology
Households
Latent variable models
Life satisfaction
Middle age
Middle aged people
Panel data
Psychologists
Regression analysis
Selection effects
Socioeconomic factors
Socioeconomic status
Studies
U-shaped
United Kingdom
Unobservables
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Summary:In this paper, we address the puzzle of the relationship between age and happiness. Whilst the majority of psychologists have concluded there is not much of a relationship at all, the economic literature has unearthed a possible U-shape relationship with the minimum level of satisfaction occurring in middle age (35–50). In this paper, we look for a U-shape in three panel data sets, the German Socioeconomic Panel (GSOEP), the British Household Panel Survey (BHPS) and the Household Income Labour Dynamics Australia (HILDA). We find that the raw data mainly supports a wave-like shape that only weakly looks U-shaped for the 20–60 age range. That weak U-shape in middle age becomes more pronounced when allowing for socio-economic variables. When we then take account of selection effects via fixed-effects, however, the dominant age-effect in all three panels is a strong happiness increase around the age of 60 followed by a major decline after 75, with the U-shape in middle age disappearing such that there is almost no change in happiness between the age of 20 and 50.
ISSN:0167-2681
1879-1751
DOI:10.1016/j.jebo.2012.03.008