Abstract
This article analyzes the main determinants of changes in subjective well-being over time in Germany distinguishing between long-term and short-term changes. Our findings for the long term indicate that social capital and values and cultural dimensions have the greatest capacity to predict changes in subjective well-being. Likewise, the correlation between economic resources and subjective well-being is weaker due to the small increase registered in household income and because people compare their income with those who are better off and feel envy. In the short term, economic resources have the highest capacity to predict both improvements (ups) and declines (downs) in subjective well-being. Finally, we also suggest that, whenever information is available, personality traits should be taken into account in the analysis of changes in subjective well-being over time in order to achieve more reliable estimates.
Highlights
IntroductionThe growing interest among economists in the study of subjective well-being and its determinants stems from the fact that indicators of subjective well-being provide information on non-material aspects of people’s well-being, which might affect their economic behaviour (Frey & Stutzer, 2017; Stutzer & Frey, 2010)
The key idea supporting this approach is that improvements in subjective well-being are positive for both individuals and society as a whole by promoting greater economic growth and social welfare (DiMaria et al, 2019; Oswald et al, 2015; Piekalkiewicz, 2017)
From a theoretical and conceptual point of view, in addition to socio-demographic control variables, we identified four key groups that should be analysed as determinants of changes in subjective well-being over time: economic resources, social capital, values and cultural dimensions, and personality traits
Summary
The growing interest among economists in the study of subjective well-being and its determinants stems from the fact that indicators of subjective well-being provide information on non-material aspects of people’s well-being, which might affect their economic behaviour (Frey & Stutzer, 2017; Stutzer & Frey, 2010). The key idea supporting this approach is that improvements in subjective well-being are positive for both individuals (e.g. better health and productivity) and society as a whole by promoting greater economic growth and social welfare (DiMaria et al, 2019; Oswald et al, 2015; Piekalkiewicz, 2017). In this framework, it is of relevance to properly understand how subjective well-being can be improved or at least maintained for future generations (Rojas, 2016; Stiglitz et al, 2011). Easterlin referred to an asymmetry in the psychological roots of income evaluations when income is rising vs. falling, which in turn causes subjective well-being to respond differently to the direction of the income change
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