Difference in life satisfaction
The IRMCS group not only did methodological studies but studied also life satisfaction in many different countries. A pilot study was planned where all participants would do the same research in their country with respect to satisfaction with life in general, housing, finances and social contacts. This research was done in 10 countries and in 17 different languages. Below we will report about the results of this cross national study. The video shows a typical meeting of our research group. This time we met in Hungary. Germa Coenders, a prominent member of the second generation of our research group gives a presentation. In such meetings we discussed our research.
Explanation of satisfaction
The first question we liked to answer was how much the background variables, gender, age, education and income would explain of the variation in satisfaction with life in general, housing, finances and social contacts. Not being experts in satisfaction research we were very surprised that these variables explained so little of the different satisfaction variables. In most cases not more than 10% of the variance in satisfaction was explained by these variables. In fact only income satisfaction was explained by approximately 10%.
One reason could be that the measurement of satisfaction contained so much error that this was the reason for the low explained variance. However correction for measurement error did not lead to serious increases in the explained variance. Therefore the conclusion had to be that the personal characteristics used can´t explain the difference in satisfaction across people. This was even true for income satisfaction while one of the explanatory variables was the income itself. This suggests that people with low incomes and high incomes don´t differ much in satisfaction with their income. This results required of course extra attention given the basic assumption of “maximization of utility” in economic theory. We needed more information so we contacted an expert.
The first question we liked to answer was how much the background variables, gender, age, education and income would explain of the variation in satisfaction with life in general, housing, finances and social contacts. Not being experts in satisfaction research we were very surprised that these variables explained so little of the different satisfaction variables. In most cases not more than 10% of the variance in satisfaction was explained by these variables. In fact only income satisfaction was explained by approximately 10%.
One reason could be that the measurement of satisfaction contained so much error that this was the reason for the low explained variance. However correction for measurement error did not lead to serious increases in the explained variance. Therefore the conclusion had to be that the personal characteristics used can´t explain the difference in satisfaction across people. This was even true for income satisfaction while one of the explanatory variables was the income itself. This suggests that people with low incomes and high incomes don´t differ much in satisfaction with their income. This results required of course extra attention given the basic assumption of “maximization of utility” in economic theory. We needed more information so we contacted an expert.
Comments of Ruut Veenhoven, the Dutch happiness professor
If there was one person that should be able to help us, it was Ruut Veenhoven who had dedicated all his academic life at satisfaction or happiness research. He has created a database with the most complete overview of all research done in this field. In the book we have made about this research, he explains why our result was not as surprising as we thought. The hypothesis we tested could be called “liveability theory” suggesting that differences in the living condition of a person will have an effect on the satisfaction of these persons. However, it is clear that the process is not so simple because it would suggest a much stronger relationship than we had found between the background variables and the satisfaction of the people.
A more likely theory, the “comparison theory”, suggests that we may occasionally increase our life satisfaction when our living conditions are improved but soon we adjust our expectations and then the satisfaction will go down to an earlier level. According to this theory only temporarily changes in income will effect changes in satisfaction.
There is an even more radical theory that suggest that satisfaction is a stable characteristic, a “personality trait”, of people. Some are always happy and others never. There is variation in satisfaction but it is hardly related to our living conditions.
Ruut Veenhoven indicated enough reason for doubt about our simple idea about the explanation of satisfaction by individual living conditions of people. However he also showed on the basis of the same data that there was a very strong relationship between income per capita in a country and the mean life satisfaction of the people in the same country. The correlations between these two variables is .93 which means the relationship is nearly perfect . The difference in results on individual level and on aggregate level is interesting and challenging.
In the last chapter of the book that we published about this research I have formulated a model that could explain both phenomena. However it would lead too far to present this model here. Interested people are referred to the book for more information. Instead we like to discuss two more issues.
If there was one person that should be able to help us, it was Ruut Veenhoven who had dedicated all his academic life at satisfaction or happiness research. He has created a database with the most complete overview of all research done in this field. In the book we have made about this research, he explains why our result was not as surprising as we thought. The hypothesis we tested could be called “liveability theory” suggesting that differences in the living condition of a person will have an effect on the satisfaction of these persons. However, it is clear that the process is not so simple because it would suggest a much stronger relationship than we had found between the background variables and the satisfaction of the people.
A more likely theory, the “comparison theory”, suggests that we may occasionally increase our life satisfaction when our living conditions are improved but soon we adjust our expectations and then the satisfaction will go down to an earlier level. According to this theory only temporarily changes in income will effect changes in satisfaction.
There is an even more radical theory that suggest that satisfaction is a stable characteristic, a “personality trait”, of people. Some are always happy and others never. There is variation in satisfaction but it is hardly related to our living conditions.
Ruut Veenhoven indicated enough reason for doubt about our simple idea about the explanation of satisfaction by individual living conditions of people. However he also showed on the basis of the same data that there was a very strong relationship between income per capita in a country and the mean life satisfaction of the people in the same country. The correlations between these two variables is .93 which means the relationship is nearly perfect . The difference in results on individual level and on aggregate level is interesting and challenging.
In the last chapter of the book that we published about this research I have formulated a model that could explain both phenomena. However it would lead too far to present this model here. Interested people are referred to the book for more information. Instead we like to discuss two more issues.
Is satisfaction a psychological trait?
If satisfaction is a psychological trait there would be variation in satisfaction across people but little change in satisfaction through time. This was an issue that Ruut Veenhoven wanted to study at a certain point in time. Looking for an intelligent assistant to help him, he found a 72 years old, prior physicist, Joop Ehrhardt, who liked to help him with the statistical analysis. When they got a difference of opinions about the analysis, they asked me to help them. At that moment I was 56 years old and I was surprised that this man, so much older than Ruut and me, was interested and capable to learn new statistical tools for a completely different field.
If satisfaction is a psychological trait there would be variation in satisfaction across people but little change in satisfaction through time. This was an issue that Ruut Veenhoven wanted to study at a certain point in time. Looking for an intelligent assistant to help him, he found a 72 years old, prior physicist, Joop Ehrhardt, who liked to help him with the statistical analysis. When they got a difference of opinions about the analysis, they asked me to help them. At that moment I was 56 years old and I was surprised that this man, so much older than Ruut and me, was interested and capable to learn new statistical tools for a completely different field.
Now that I am 77 years old, I understand that this is not so unusual. I stopped with my work at the age of 70 but would have been very dissatisfied with my life if I had not continued to use my brain for different challenging activities. However, to become president of the USA, like Jo Biden wants, at my age, seems to me to be a big mistake.
Anyway, together we analyzed the data of a German panel study and were able to show that there was a considerable change in satisfaction for the respondents through time. Only a limited part of the variance in the satisfaction was due to people who did not change in satisfaction. After correction for measurement error, still a considerable part of the variance was explained by change in satisfaction through time which could be upwards and downwards. Joop Ehrhardt was proud of this paper where he became the first author. I enjoyed working with him, observing his capabilities and motivation to learn new complex things at his age. He showed how one could enjoy life also at a high age by doing new things.
Anyway, together we analyzed the data of a German panel study and were able to show that there was a considerable change in satisfaction for the respondents through time. Only a limited part of the variance in the satisfaction was due to people who did not change in satisfaction. After correction for measurement error, still a considerable part of the variance was explained by change in satisfaction through time which could be upwards and downwards. Joop Ehrhardt was proud of this paper where he became the first author. I enjoyed working with him, observing his capabilities and motivation to learn new complex things at his age. He showed how one could enjoy life also at a high age by doing new things.
Do income changes have an effect on changes in income satisfaction?
Above we have mentioned that we found in all countries that the income of people hardly had any effect on their income satisfaction. This conclusion was based on studies where we made comparisons across people.
We have seen above that change in satisfaction occurs at least for some people, therefore I suggested a very simple model for such change of satisfaction through time due to income changes and showed that the effect was much higher than reported above. This is the simple model:
a change in satisfaction = B x a change in income
Where B is the effect of the income change on the change in satisfaction
On the basis of Russian data we found that the effect of income on satisfaction across people, as we first studied, was below .2, while with the models based on change of the two variables the estimated effect was .56. The second model suggests a much larger effect. This difference in effect was also found in other countries. For the explanation of this difference I refer to the paper. So the conclusion was that an increase in income indeed brings about an increase in income satisfaction.
Above we have mentioned that we found in all countries that the income of people hardly had any effect on their income satisfaction. This conclusion was based on studies where we made comparisons across people.
We have seen above that change in satisfaction occurs at least for some people, therefore I suggested a very simple model for such change of satisfaction through time due to income changes and showed that the effect was much higher than reported above. This is the simple model:
a change in satisfaction = B x a change in income
Where B is the effect of the income change on the change in satisfaction
On the basis of Russian data we found that the effect of income on satisfaction across people, as we first studied, was below .2, while with the models based on change of the two variables the estimated effect was .56. The second model suggests a much larger effect. This difference in effect was also found in other countries. For the explanation of this difference I refer to the paper. So the conclusion was that an increase in income indeed brings about an increase in income satisfaction.