Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/195177 
Authors: 
Year of Publication: 
2019
Series/Report no.: 
SOEPpapers on Multidisciplinary Panel Data Research No. 1027
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
This empirical investigation into life satisfaction, using nationally representative German panel data, finds a substantial association with an individual's thoughts about the future, whether they are optimistic or pessimistic about it. Furthermore, including individuals' optimism and pessimism about the future substantially increases the explanatory power of standard life satisfaction models. The thoughts that individuals have about the future contribute substantially to their current life satisfaction. In particular, the reduction in life satisfaction experienced by individuals who report being pessimistic is greater than that for well-understood negative events like unemployment. These effects are attenuated but remain substantial after controlling for individual fixed effects, statistically matching on observable variables between optimistic and pessimistic individuals, and addressing the potential endogeneity of optimism and pessimism to life satisfaction. Moreover, these effects are robust to controlling for future life events that may be anticipated.
Subjects: 
life satisfaction
subjective well-being
mental health
entropy balancing
GMM
dynamics
endogeneity
SOEP
JEL: 
C23
D84
I31
Document Type: 
Working Paper

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