Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/29755 
Year of Publication: 
2009
Series/Report no.: 
DIW Discussion Papers No. 889
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
This paper applies semiparametric regression models using penalized splines to investigate the profile of well-being over the life span. Splines have the advantage that they do not require a priori assumptions about the form of the curve. Using data from the British Household Panel Survey (BHPS) and the German Socio-Economic Panel Study (SOEP), the analysis shows a common, quite similar, age-specific pattern of life satisfaction for both Britain and Germany that can be characterized by three age stages. In the first stage, life satisfaction declines until approximately the fifth life decade. In the second age stage, well-being clearly increases and has a second turning point (maximum) after which well-being decreases in the third age stage. Several reasons for the three-phase pattern are discussed. We point to the fact that neither polynomial functions of the third nor the fourth degree describe the relationship adequately: polynomials locate the minimum and the maximum imprecisely. In addition, our analysis discusses the indistinguishability of age, period, and cohort effects: we propose estimating age-period models that control for cohort effects including substantive variables, such as the life expectancy of the birth cohort, and further observed socioeconomic characteristics in the regression.
Subjects: 
Subjective well-being
life satisfaction
semiparametric regression
penalized splines
age-period model
age-cohort model
JEL: 
C14
C23
D10
I31
Document Type: 
Working Paper

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