Abstract
The paper investigates the extent to which life-satisfaction is biased by peer-comparison by looking at the relative value attached to the different domains of life-satisfaction, as suggested by Easterlin (Economics and happiness: framing the analysis, Oxford University Press, New York, 2005), by social group. We postulate that group membership influences the ranking of the satisfaction domains affecting subjective well-being which allows individuals to go back to their individual threshold over time. Using ordered probit models with random effects, the evidence for professional (self-employed vs. employee) and social (male vs. female) groups using the British Household Panel Survey and Understanding Society—UK Household Longitudinal Study from 1996 to 2014 shows that the ranking of the satisfaction domains is group-based suggesting a “keeping up with the Joneses” effect linked to the housing bubble.
Highlights
IntroductionThe literature on subjective well-being (SWB) has made significant progress over the past 20 years, yet little is known the influence of group membership on SWB, and in particular
The literature on subjective well-being (SWB) has made significant progress over the past 20 years, yet little is known the influence of group membership on SWB, and in particular on the relative value of the different domains of life-satisfaction
This paper investigates the extent to which subjective well-being by group rather than individual has been affected by the housing bubble in the built-up towards the financial crisis and in the aftermath of the crisis
Summary
The literature on subjective well-being (SWB) has made significant progress over the past 20 years, yet little is known the influence of group membership on SWB, and in particular. The methodology used to estimate the determinants of subjective well-being (SWB) matters to understand its dynamics (Ferrer-i-Carbonell and Frijters 2004; Binder and Coad 2010). The empirical hypotheses tested here are whether the ranking of the determinants of life-satisfaction are group-based, and whether they are similar prior and after the crisis. Using an ordered probit model, we test for the determinants of SWB in the UK for professional (self-employed vs employee) and social (male vs female) groups from 1996 to 2014.
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