compared with 3 for a Gaussian distribution. The high kurtosis implies that, in a given year, most individuals experience very … response functions of earnings shocks and find important asymmetries: Positive shocks to high-income individuals are quite … transitory, whereas negative shocks are very persistent; the opposite is true for low-income individuals. Finally, we use these …

This paper models the relationship between income and reported well-being using latent class techniques applied to … strongly reject the hypothesis that individuals transform income into well-being in the same way. We show that both individual … marginal effect of income on well-being across classes will be reflected in both behaviour and preferences for redistribution. …