Is Wellbeing U-Shaped over the Life Cycle.pdf

1 Is Wellbeing U-Shaped over the Life Cycle? David G. Blanchflower Department of Economics Dartmouth College USA Email: david.g.blanchflower@dartmouth.edu Andrew J. Oswald Department of Economics University of Warwick UK Email: andrew.oswald@warwick.ac.uk August 10, 2006 Abstract Recent research suggests that psychological wellbeing is U-shaped in age. The weakness of this argument is that there are likely to be omitted cohort effects (earlier generations may have been born in, say, particularly good or bad times). Hence the apparent U may be an artefact. Using data on 500,000 Americans and Europeans, we design a test that allows for different birth-cohorts. A robust U-shape is found. Ceteris paribus, wellbeing reaches its minimum -- on both sides of the Atlantic and for both males and females -- in people’s mid to late 40s. Word count: 3800 Keywords: Happiness; aging; wellbeing; cohorts JEL codes: D1, I3 Corresponding author: andrew.oswald@warwick.ac.uk. Address: Department of Economics, University of Warwick, Coventry CV4 7AL, United Kingdom. Telephone: (+44) 02476 523510 Acknowledgements: We thank Andrew Clark for helpful discussions 2 Is Wellbeing U-Shaped over the Life Cycle? 1. Introduction A large social-science literature is emerging on the determinants of happiness and mental wellbeing. As would be expected, this topic has attracted the attention of medical statisticians, psychologists, economists, and other investigators (including Easterlin 2003, Frey and Stutzer 2002, Lucas et al 2004, Layard 2005, Smith et al 2005, Ubel et al 2005, Gilbert 2006, and Kahneman et al 2006). However, a fundamental research question remains poorly understood. What is the relationship between age and wellbeing? Traditional surveys of the field, such as Myers (1992), Diener et al (1999) and Argyle (2001), argue that happiness is either flat or very slightly increasing in age. New work has show