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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


Felix R FitzRoy

Dr Michael Nolan
Senior Lecturer in Economics and HUBS Undergraduate Admissions Tutor

Max F Steinhardt

David Ulph


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.


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.

Journal Article Type Article
Acceptance Date Oct 1, 2014
Online Publication Date Dec 30, 2014
Publication Date 2014
Deposit Date Apr 4, 2019
Publicly Available Date Apr 4, 2019
Journal IZA Journal of European Labor Studies
Print ISSN 2193-9012
Electronic ISSN 2193-9012
Publisher Springer Verlag
Peer Reviewed Peer Reviewed
Volume 3
Issue 1
Pages 24
Keywords Subjective life-satisfaction; Comparison income; Reference groups; Age; Welfare
Public URL
Publisher URL


Published article (613 Kb)

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 (, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly credited.

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