Choices Which Change Life Statisfaction – Similar Results for Australia, Britain and Germany

49 Pages Posted: 27 May 2010 Last revised: 29 Mar 2017

See all articles by Bruce Headey

Bruce Headey

University of Melbourne - Melbourne Institute: Applied Economic & Social Research

Ruud Muffels

Tilburg University

Gert G. Wagner

German Institute for Economic Research (DIW Berlin); Berlin University of Technology; German Socio-Economic Panel Study (SOEP)

Date Written: January 1, 2011

Abstract

Using data from national socio-economic panel surveys in Australia, Britain and Germany, this paper analyzes the effects of individual preferences and choices on subjective well-being (SWB). It is shown that, in all three countries, preferences and choices relating to life goals/values, partner’s personality, hours of work, social participation and healthy lifestyle have substantial and similar effects on life satisfaction. The results have negative implications for a widely accepted theory of SWB, set-point theory. This theory holds that adult SWB is stable in the medium and long term, although temporary fluctuations occur due to life events. Set-point theory has come under increasing criticism in recent years, primarily due to unmistakable evidence in the German Socio-Economic Panel that, during the last 25 years, over a third of the population has recorded substantial and apparently permanent changes in life satisfaction (Fujita and Diener, 2005; Headey, 2008a; Headey, Muffels and Wagner, 2010). It is becoming clear that the main challenge now for SWB researchers is to develop new explanations which can account for medium and long term change, and not merely stability in SWB. Set-point theory is limited precisely because it is purely a theory of stability. The paper is based on specially constructed panel survey files in which data are divided into multi-year periods in order to facilitate analysis of medium and long term change.

Keywords: set-point theory, life goals/values, individual choice, panel regression analysis, BHPS, HILDA, SOEP

JEL Classification: I31, J1, Z13

Suggested Citation

Headey, Bruce and Muffels, Ruud and Wagner, Gert G., Choices Which Change Life Statisfaction – Similar Results for Australia, Britain and Germany (January 1, 2011). SOEPpaper No. 302, Available at SSRN: https://ssrn.com/abstract=1616025 or http://dx.doi.org/10.2139/ssrn.1616025

Bruce Headey (Contact Author)

University of Melbourne - Melbourne Institute: Applied Economic & Social Research ( email )

Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia

Ruud Muffels

Tilburg University ( email )

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Gert G. Wagner

German Institute for Economic Research (DIW Berlin) ( email )

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Germany
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HOME PAGE: http://www.diw.de/programme/jsp/MA.jsp?language=en&uid=gwagner

Berlin University of Technology ( email )

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Germany
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German Socio-Economic Panel Study (SOEP) ( email )

DIW Berlin
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HOME PAGE: http://www.diw/en/soep

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