Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/28101 
Year of Publication: 
2009
Series/Report no.: 
Diskussionsbeiträge No. 2009/12
Publisher: 
Freie Universität Berlin, Fachbereich Wirtschaftswissenschaft, Berlin
Abstract: 
We reexamine the claim that the effect of income on subjective well-being suffers from a systematic downward bias if one ignores that higher income is typically associated with more work effort. We analyze this claim using German panel data, controlling for individual unobserved heterogeneity, and specifying the impact of working hours in a non-monotonic form. Our results suggest that the impact of working hours on happiness is rather small and exhibits an inverse U-shape. We do not find evidence that leaving working hours out of the analysis leads to an underestimation of the income effect.
Subjects: 
Happiness
life satisfaction
income
disutility of labor
JEL: 
D60
I31
ISBN: 
978-3-941240-06-3
Document Type: 
Working Paper

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