Life satisfaction does not adapt to high income: After five or more years, people who maintain high incomes still have higher life satisfaction than the average population

Happiness adaptation to high income: Evidence from German panel data. Jianbo Luo. Economics Letters, July 13 2021, 109995. https://doi.org/10.1016/j.econlet.2021.109995

Highlights

• Life satisfaction does not adapt to high income.

• After five or more years, people who maintain high incomes still have higher life satisfaction.

Abstract: This paper is the first to use national representative panel data to demonstrate that individuals do not adapt to high income in the long run: after five or more years, the life satisfaction of high-income people is still higher than that of the average population. Using entropy balancing (EB) matching and Lasso variable selection to reweight the control group yields similar results.

Keywords: High incomeSubjective well-beingAdaptationEntropy balancingMachine learning Lasso