Past and Present Subjective Well-being: the Role of Contrast and Memory

Umakrishnan Kollamparambil

doi:10.1007/s11482-021-09958-y

Umakrishnan Kollamparambil

Open Access

https://doi.org/10.1007/s11482-021-09958-y

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Abstract

This study is an attempt to analyse the interrelationships between current, past and expected future subjective well-being (SWB) through the intermediating role of memory using the National Income Dynamics Study panel dataset for South Africa. The contribution of this study is in exploring the role of contrast (intertemporal and social) in determining (a) the current levels of SWB and (b) the drivers of recall bias, within a causal framework in the context of a country with low average SWB and high SWB inequality. The results indicate significant presence of hedonic adaptation and reveals past and future contrast as important correlates of current subjective well-being. In addition, a perceived improvement in current happiness from the past is associated with higher levels of current SWB, highlighting the intermediating role of memory. Memory, however, is observed to be biased with only 42% accuracy. Higher levels of current subjective well-being are found to enhance the probability of correct recall of the past. An overall improvement bias is evident among those in the lower segment of the SWB distribution. The results reinforce the hypothesised simultaneous relationships between current SWB, intertemporal contrast and recall behaviour. Furthermore, the differences in our findings from European studies emphasize the relevance of context in driving these relationships.

Highlights

The concept of subjective wellbeing (SWB) broadly refers to the level of life satisfaction in general that individuals self-report
The contribution of this study is in exploring the role of contrast in determining; a) the current levels of SWB and, b) the drivers of recall bias; within a causal framework in the context of a country with low average SWB and high SWB inequality
Past average levels of subjective wellbeing (Average SWB) are positively and significantly correlated with current levels of SWB pointing to the hedonistic treadmill argument that individuals tend to maintain a consistent level of SWB

Summary

Introduction

The concept of subjective wellbeing (SWB) broadly refers to the level of life satisfaction in general that individuals self-report. This study further improves on Prati and Senik (2020) by considering the additional element of future expectations in driving recall behaviour, based on the contention in literature (Tatarkiewicz 1966; Gomez et al 2013) that present level of SWB is both retrospective and prospective. Undertaking the analysis within the context of South Africa (a developing country ranking 106 in Happiness index (Helliwell et al 2019)) provides additional insights from other recent studies focused on developed countries with higher average satisfaction levels (like Kaiser 2020; Prati and Senik 2020). The context of study is relevant as Prati & Senik (2020) argues that the nature of bias is dependent on the level of satisfaction, which are vary significantly across countries of different developmental status Based on this premise, overestimation bias is likely to dominate for societies with high satisfaction level (as developed countries), as happy people tend to overstate the time improvement in their life satisfaction. Top up is deleted as data for first wave is not available

Descriptive Statistics

Multivariate Estimation Strategy

Contrast effects

Study Limitations

Conclusion