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Estimating the influence of life satisfaction and positive affect on later income using sibling fixed-effects
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Oswald, Andrew J. and De Neve, Jan-Emmanuel (2012) Estimating the influence of life satisfaction and positive affect on later income using sibling fixed-effects. Working Paper. Coventry, UK: Department of Economics, University of Warwick. CAGE Online Working Paper Series, Volume 2012 (Number 100).
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Text (Working paper)
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Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
Abstract
The question of whether there is a connection between income and
psychological well-being is a long-studied issue across the social, psychological, and
behavioral sciences. Much research has found that richer people tend to be happier.
However, relatively little attention has been paid to whether happier individuals perform
better financially in the first place. This possibility of reverse causality is arguably
understudied. Using data from a large US representative panel we show that adolescents
and young adults who report higher life satisfaction or positive affect grow up to earn
significantly higher levels of income later in life. We focus on earnings approximately one
decade after the person’s well-being is measured; we exploit the availability of sibling
clusters to introduce family fixed-effects; we account for the human capacity to imagine
later socio-economic outcomes and to anticipate the resulting feelings in current wellbeing.
The study’s results are robust to the inclusion of controls such as education, IQ,
physical health, height, self-esteem, and later happiness. We consider how psychological
well-being may influence income. Sobel-Goodman mediation tests reveal direct and
indirect effects that carry the influence from happiness to income. Significant mediating
pathways include a higher probability of obtaining a college degree, getting hired and
promoted, having higher degrees of optimism and extraversion, and less neuroticism.
Item Type: | Working or Discussion Paper (Working Paper) | ||||
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Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HM Sociology |
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Divisions: | Faculty of Social Sciences > Economics | ||||
Library of Congress Subject Headings (LCSH): | Income, Satisfaction , Happiness | ||||
Series Name: | CAGE Online Working Paper Series | ||||
Publisher: | Department of Economics, University of Warwick | ||||
Place of Publication: | Coventry, UK | ||||
Official Date: | 2012 | ||||
Dates: |
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Volume: | Volume 2012 | ||||
Number: | Number 100 | ||||
Number of Pages: | 29 | ||||
Institution: | University of Warwick | ||||
Status: | Not Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Open Access (Creative Commons) | ||||
Date of first compliant deposit: | 1 August 2016 | ||||
Date of first compliant Open Access: | 1 August 2016 | ||||
Funder: | Great Britain. Department for Work and Pensions (DWP), National Institute on Aging (NIA), Eunice Kennedy Shriver National Institute of Child Health and Human Development (U.S.) | ||||
Grant number: | P01-HD31921 (EKS) | ||||
Version or Related Resource: | De Neve, J. -E. and Oswald, Andrew J. . (2012) Estimating the influence of life satisfaction and positive affect on later income using sibling fixed effects. Proceedings of the National Academy of Sciences of the United States of America, Vol.109 (No.49). pp. 19953-19958. http://wrap.warwick.ac.uk/id/eprint/52737 | ||||
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