TY  - JOUR
AU  - Tella,Rafael Di
AU  - New,John Haisken-De
AU  - MacCulloch,Robert
TI  - Happiness Adaptation to Income and to Status in an Individual Panel
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13159
PY  - 2007
Y2  - June 2007
UR  - http://www.nber.org/papers/w13159
L1  - http://www.nber.org/papers/w13159.pdf
N1  - Author contact info:
Rafael Di Tella
Harvard Business School
Soldiers Field Rd
Boston, MA 02163
Tel: 617/495-6000
E-Mail: rditella@hbs.edu

John Haisken-De New
Rheinisch-Westf?lisches Institut
f?r Wirtschaftsforschung
Hohenzollernstra?e 1-3
45128 Essen
GERMANY
E-Mail: jhaiskendenew@rwi-essen.de

Robert MacCulloch
The Business School
Imperial College London
South Kensington Campus
London SW7 2AZ
United Kingdom
Tel: +44 (0)20 7594157
Fax: +44 (0)20 7823 7685
E-Mail: r.macculloch@imperial.ac.uk
AB  - We study "habituation" to income and to status using individual panel data on the happiness of 7,812 people living in Germany from 1984 to 2000. Specifically, we estimate a "happiness equation" defined over several lags of income and status and compare the long run effects. We can (cannot) reject the hypothesis of no adaptation to income (status) during the four years following an income (status) change. In the short-run (current year) a one standard deviation increase in status and 52% of one standard deviation in income are associated with similar increases in happiness. In the long-run (five year average) a one standard deviation increase in status has a similar effect to an increase of 285% of a standard deviation in income. We also present different estimates of habituation across sub-groups. For example, we find that those on the right (left) of the political spectrum adapt to status (income) but not to income (status).
ER  -