Life satisfaction and age: Dealing with underidentification in age-period-cohort models

Recent literature typically finds a U shaped relationship between life satisfaction and age. Age profiles, however, are not identified without forcing arbitrary restrictions on the cohort and/or time profiles. In this paper we report what can be identified about therelationship between life satisfaction and age without applying such restrictions. Also, we identify the restrictions needed to conclude that life satisfaction is U shaped in age. We find that a U shaped relationship between life satisfaction and age is indeed supported bythe data, but only under the untestable condition that the linear time trend is negative and that the linear trend across birth cohorts is practically flat.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

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