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Testing the tunnel effect: comparison, age and happiness in UK and German panels

FitzRoy, Felix R; Nolan, Michael A; Steinhardt, Max F; Ulph, David

Authors

Felix R FitzRoy

Dr Michael Nolan M.A.Nolan@hull.ac.uk
Senior Lecturer in Economics and Programme Director, BSc Economics (Certificate and Diploma Stages) and BSc(Econ) Economics (Honours Stage)

Max F Steinhardt

David Ulph



Contributors

Abstract

In contrast to previous results combining all ages, we find positive effects of comparison income on happiness for the under 45s and negative effects for those over 45. In the UK, these coefficients are several times the magnitude of own income effects. In West Germany, they cancel out to give no effect of comparison income on life satisfaction in the whole sample when controlling for fixed effects, time-in-panel, and age-groupings. Pooled OLS estimation gives the usual negative comparison effect in the whole sample for both West Germany and the UK. The residual age-happiness relationship is hump-shaped in all three countries. Results are consistent with a simple life cycle model of relative income under uncertainty.

Journal Article Type Article
Publication Date 2014
Journal IZA Journal of European Labor Studies
Print ISSN 2193-9012
Publisher Springer Verlag
Peer Reviewed Peer Reviewed
Volume 3
Issue 1
Pages 24
APA6 Citation FitzRoy, F. R., Nolan, M. A., Steinhardt, M. F., & Ulph, D. (2014). Testing the tunnel effect: comparison, age and happiness in UK and German panels. IZA Journal of European Labor Studies, 3(1), 24. https://doi.org/10.1186/2193-9012-3-24
DOI https://doi.org/10.1186/2193-9012-3-24
Keywords Subjective life-satisfaction; Comparison income; Reference groups; Age; Welfare
Publisher URL https://izajoels.springeropen.com/articles/10.1186/2193-9012-3-24

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Copyright Statement
© FitzRoy et al.; licensee Springer. 2014
This article is published under license to BioMed Central Ltd. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly credited.





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