Grazia passed on this link to a report by Joel Waldfogel:
People with higher incomes today report higher levels of happiness than their poorer contemporaries. At the same time, people today are far richer than earlier generations, but they’re not happier than those who came before them. In light of such wrinkles, a growing cadre of economists has cut out the money middleman and moved to study happiness directly. The latest installment in this genre is a new study by economists David Blanchflower of Dartmouth and Andrew Oswald of Warwick. They document how happiness evolves as people age. While income and wealth tend to rise steadily over the life cycle, peaking around retirement, happiness follows a U-shaped age pattern.
It’s a good news article, with data details:
The authors’ data come from large-scale surveys. The General Social Survey asks Americans to rate their happiness level on a three-point scale, with “very happy” a three, “pretty happy” a two, and “not too happy” a one. The average happiness score in the United States is 2.2. The data, covering people older than 16, come from the years 1974 through 2004 and include about 20,000 men and 25,000 women. Across the Atlantic, the Eurobarometer offers a similar four-point scale (very satisfied, fairly satisfied, not very satisfied, not at all satisfied). The average happiness score in Europe is three. The data include about 400,000 men and women in 11 European countries, from 1975 to 1998.
Analyzing data from these surveys, Blanchflower and Oswald found that for both men and women in the United States and throughout Europe, happiness starts off relatively high in early adulthood, then falls, bottoming out on average around age 45, and then rises after that year and on into old age, especially when one follows tips to ensure your retirement is a happy one.
In this study (as in others), people are happier than their poorer counterparts if they have more income. How does the effect of income on happiness compare with the age effect? In the United States, the steady decline in happiness from age 16 to age 45 has an effect that’s larger than a 50 percent reduction in income-that is, happiness varies more as people get older than it does if you compare significantly richer people to poorer ones. And, equivalently, the 15-year upswing in happiness that follows age 45 is stronger than the upswing that tracks doubling of income. For Europeans, the age-based happiness rise that’s equivalent to the effect of doubling income occurs between ages 35 and 70. Take a look at Key If you’re approaching this stage of life, starting to think about your retirement finances may be something worth considering. As this process may not be easy for everything to think about, even doing a quick google search into how investing will make your retirement better, for example, could help people get an understanding of how best to manage finances. Hopefully, the idea of retirement will start to become a lot less stressful to think about.
Additionally, It may be worth checking out some pro tips to retire stress-free, as there will be a lot to take in when it comes to making this smooth transition from working life to retirement.
There’s an age-period-cohort issue:
The U-shaped happiness pattern is not a completely new finding. But past researchers couldn’t tell whether 55-year-olds were happier than 45-year-olds in a given year because they’d aged or because they were born to a sunnier generation. This study gets around this problem by combining data on people of different ages at different points in time over a quarter-century. The authors can compare not only 55- and 45-year-olds today, but also 55-year-olds today to people who were 45 a decade ago. And when they account for when people were born, the U-shaped happiness pattern remains.
The authors also find that over the last century, Americans, both men and women, have gotten steadily-and hugely-less happy. The difference in happiness of men between men of my generation, born in the 1960s, and my father’s generation, born in the 1920s, is the same as the effect of a tenfold difference in income. In other words, if my father had little money compared to his contemporaries and I have lots of money compared to mine, I can still expect to be less happy. Here, curiously, the European pattern diverges. Happiness falls for the birth years from 1900 to about 1950, and generations born on the continent since World War II have gotten successively happier.
These age-period-cohort things always confuse me. I can’t quite believe that this is quite identified.
Here’s the paper by Blanchflower and Oswald. It’s an interesting mix of theorizing, literature review, and number crunching.
Just a few statistical comments . . .
First off, the results should be graphed, either with time on the x-axis or age on the x-axis. I wanna see that “U-shape”! Beyond that, if the key issue is the pattern with age, it would be good to see more modeling, not just a quadratic curve (age and age-squared). If splines are too much work, then I’d like to see a few age categories. A lot of interpretation seems to be riding on this quadratic assumption. Can you really conclude, for example, that “the minimum point of well-being is estimated at age 49.1”? At the very least, the zillions of data points would allow you to do a binned residual plot and look for departures from the curve by age.
At a technical level, if you are going to use age and age squared, you should at least do some standardization, if not a full standardization then something simple like using (age – 40)/10 so that (a) you can interpret the linear term in the presence of the quadratic, (b) you don’t get coefficients like .00026 which are impossible to interpret directly.
Anyway, interesting stuff, and I’m sure that this study will motivate lots more explorations of these questions.