Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/150851 
Year of Publication: 
2010
Series/Report no.: 
SOEPpapers on Multidisciplinary Panel Data Research No. 306
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
This paper looks at the information content of satisfaction scores. It is argued that the information content depends on the extent to which people adapt to living conditions in general. Using data from the German Socio-Economic Panel Study (SOEP), the estimation of a dynamic panel data model provides evidence that adaptation takes place within a relatively short window of time: changes in living conditions are, for the most part, absorbed by an adjustment of the adaptation level within one year. This leads to the conclusion that the information content of satisfaction scores accentuates recent changes in living conditions. Remote changes are notcaptured by the according survey questions, even if these changes have long-term impact on living conditions. The usefulness of satisfaction scores as an indicator of people's living conditions is discussed.
Subjects: 
adaptation
dynamic panel data model
subjective well-being
satisfaction
JEL: 
C23
I31
Document Type: 
Working Paper

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