We show that personality traits mediate the effect of income on Life Satisfaction. The effect is strong in the case of Neuroticism, which measures the sensitivity to threat and punishment, in both the British Household Panel Survey and the German Socioeconomic Panel. Neuroticism increases the...

We show that personality traits mediate the effect of income on Life Satisfaction. The effect is strong in the case of Neuroticism, which measures the sensitivity to threat and punishment, in both the British Household Panel Survey and the German Socioeconomic Panel. Neuroticism increases the...

We use a new and large panel dataset of household income to shed light on the permanent versus transitory nature of rising inequality in individual male labor earnings and in total household income, both before and after taxes, in the United States over the period 1987-2006. Due to the quality...

We generalize the canonical permanent-transitory income process to allow for infrequent shocks. The distribution of income growth rates can then have a discrete mass point at zero and fat tails as observed in income data. We provide analytical formulas for the unconditional and conditional...

Theory suggests that subjective well-being is affected by income comparisons and adaptation to income. Empirical tests of the effects often rely on self-constructed measures from survey data. This paper shows that results can be highly sensitive to simple parameter changes. Using large-scale...

We use the SHIW panel dataset to characterize the properties of household income patterns in Italy. Our model treats income as a linear combination of deterministic, persistent AR(1) and transitory MA(1) components. We find the typical hump-shape commonly observed on US data only for households...