1 Introduction • Evaluating the significance of major life events is important • Subjective happiness reports are one tool • Existing research has used subjective reports but has not generally taken dynamic responses into account • Our work utilizes Health and Retirement Study (HRS) panel data to get a more complete picture of life events

1 Introduction Evaluating the significance of major life events is important Subjective happiness reports are one tool Existing research has used subjective

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Introduction

• Evaluating the significance of major life events is important• Subjective happiness reports are one tool• Existing research has used subjective reports but has not generally taken dynamic responses into account• Our work utilizes Health and Retirement Study (HRS) panel data to get a more complete picture of life events

Happiness Index• We define our happiness index using the Center for Epidemiologic Studies

Depression Scale (CESD) questions in the HRS. • “…Tell me how often you have experienced the following feelings during the

past week -- all or almost all of the time, most of the time, some of the time, or none or almost none of the time:

(1) I felt depressed. (2) I was happy. (3) I enjoyed life. (4) I felt sad.”• Coding: for 1992 wave:

Score = (depressed: none, or almost none of the time = 1)

+ (happy: all, most, or some of the time = 1)

+ (enjoyed life: all, most, or some of the time = 1)

+ (sad: none, or almost none of the time = 1)

for 1993-2004:

Score = (depressed: not much of the time = 1)

+ (happy: much of the time = 1)

+ (enjoyed life: much of the time = 1)

+ (sad: not much of the time = 1)

Happiness Index = Score x 25 --> range from 0 (not happy) to 100 (happiest).

Page 3: 1 Introduction Evaluating the significance of major life events is important Subjective happiness reports are one tool Existing research has used subjective

Many Life-Events• There are many important life-events available in the HRS to study, among them:

Health events

•heart attacks, stroke, cancer, cataract surgery, incontinence, congestive heart failure, hip fracture

Death: death of kid (have month & year only through 2000), death of spouse (month & year for all waves) Employment: unemployment (month & year), retirement (month & year)

Page 4: 1 Introduction Evaluating the significance of major life events is important Subjective happiness reports are one tool Existing research has used subjective

Data• Health and Retirement Study (HRS)• Panel data from 1992 to 2008, with biennial interviews.• Number of individuals in couples in 1992 (or 1993

AHEAD): 894 (out of 1,154 possible = 77%).

• Number of widows or widowers: 785• Average happiness index: 80• Average happiness index for widows or widowers: 79.7

Page 5: 1 Introduction Evaluating the significance of major life events is important Subjective happiness reports are one tool Existing research has used subjective

Widowhood

• There are 785 widows or widowers in our HRS sample.• Average happiness index: 79.7• Average happiness index for men: 83.3 (200 men)• Average happiness index for women: 78.6 (585 women)• with life insurance: 81.1 (285 individuals)• without life insurance: 76.0 (138 individuals)note: only 423 answered life insurance question.

Page 6: 1 Introduction Evaluating the significance of major life events is important Subjective happiness reports are one tool Existing research has used subjective

Estimation

• Variants of the following equation are estimated via non-linear least squares, where H is the happiness measure, Y is log income, BP and BT are the permanent and temporary effects, respectively, and delta is the rate at which the temporary effect decays