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Life cycle welfare: evidence and conjecture.

Richard A. Easterlin [*]

Abstract

At a point in time subjective well-being is positively related to income; over the life course subjective well-being is constant despite substantial growth in income. This paradox is explained by new evidence on consumption aspirations. At a point in time aspirations vary fairly little by income level; over the life cycle, aspirations increase about in proportion to income. These shifts in aspirations also affect assessments of past and future well-being in such a way that the choices underlying behavior (based on what psychologists call "decision utility") turn out not to have their expected welfare effects (experienced utility). Of the two influences shaping consumption aspirations -- comparisons with others and with one's past experience -- the former appears more salient early in the life cycle and the latter, later on. [C] 2001 Elsevier Science Inc. All rights reserved.

JEL Classification: D60, I31, D12, D91

Keywords: Welfare; Life cycle; Preferences

1. Introduction

Life is a progress from want to want, not from enjoyment to enjoyment.

Samuel Johnson, 1776

Do people typically feel better or worse off as they move through the life cycle? Or does well-being perhaps follow a U-shaped pattern, positive or inverted? What are the causes of the life cycle pattern of welfare, and how important is one's economic condition in shaping this pattern? These are the concerns of this paper -- the nature of subjective well-being over the life cycle and the causal role of economic status. In what follows, I shall use the terms subjective well-being, happiness, satisfaction, utility, and welfare interchangeably.

The implications of economic theory for life cycle welfare are ambiguous. Subjective well-being depends largely on concerns that are most immediate to people's personal lives -- material living levels, family circumstances, health, and job attributes (Andrews & Withey, 1976; Campbell, 1981; Campbell, Converse & Rodgers, 1976; Cantril, 1965; Veroff, Douvan & Kulka, 1981). Because material living levels depend chiefly on income, one might suppose, following Pigou (1962), that the substantial growth of income during the working ages would, other things equal, bring with it a corresponding growth in happiness, perhaps followed, in retirement, by a decline in well-being as income levels off or diminishes. On the other hand, the life cycle hypothesis, which sees people as stabilizing their consumption stream in relation to age, would seem to imply a constant level of happiness over the life cycle (Modigliani & Brumberg, 1954).

In what follows, I shall suggest that the empirical implication of the life cycle model is correct, but that the underlying theory is contradicted by evidence on how people view their past and future well-being. I shall suggest an alternative interpretation of the life cycle stability in well-being, and present some supporting evidence.

I start with a brief review of prior work, followed by a sketch of the data and the technique of life cycle measurement used here. I then present the substantive results on life cycle welfare, followed by a tentative analysis of determinants. Thus I proceed from evidence to conjecture.

2. Prior research

The measurement and analysis of subjective well-being has a half century history in the social sciences (a bibliographical survey by Veenhoven (1993) contains about 2500 references). In the past, contributions by economists have been relatively slim (Abramovitz, 1979; Easterlin, 1974; Frank, 1985a,b; Morawetz et al., 1977; Ng, 1978; Scitovsky, 1976, 1986, and van Praag & Kapteyn, 1973). Recent years, however, have seen a flowering of work, including a valuable symposium on economics and happiness in the Economic Journal (see Dixon, 1997; Frank, 1997; Oswald, 1997; Ng, 1997; and the references in these articles to recent work by economists).

Some economists today prefer not to theorize about subjective states of mind, and to deal only with observed behavior, as in the theory of revealed preference (for a recent review of utility and revealed preference theory in this century, see Lewin 1996). A pioneering and highly original scholar in the use of subjective data, economist Bernard van Praag, is, not surprisingly, one of the most forceful critics of this economic orthodoxy. He quotes Harsanyi (1987):

[I]t seems to me that economists and philosophers influenced by logical positivism have greatly exaggerated the difficulties we face in making interpersonal utility comparisons with respect to the utilities and the disutilities that people derive from ordinary commodities and, more generally, from the ordinary pleasures and commodities of human life, and goes on to comment that "it is rather remarkable that mainstream economics for half a century ... has followed a way which is so different from what is going on in the development of most sciences. Mostly science is following reality, instead of ignoring it" (Van Praag, 1994, p. 88, emphasis in original). The present article is offered in the spirit of attempting to follow reality.

The revealed preference approach has also been criticized as lending itself to a paternalistic view of well-being, because the judgment on a person's welfare is made, not by the person himself, but by an outsider who is observing the person's consumption choices -- in effect, experts set themselves up as arbiters of individual well-being based on "objective" indicators (Hollander, 1996). For those economists who believe that the only one who can make authoritative observations on a person's subjective well-being is the person himself, subjective indicators of the present type are preferable, or, at a minimum, deserve study. In recent research on quality of life and the standard of living, the use of subjective indicators has been receiving increasing attention (Blundell, Preston & Walker, 1994; Elster & Roemer, 1991, Nussbaum & Sen, 1993, Offer, 1996).

The principal way in which subjective well-being is measured in the literature is a direct question of the sort used since 1972 in the United States' General Social Survey (GSS): "Taken all together, how would you say things are these days -- would you say that you are very happy, pretty happy, or not too happy?" (National Opinion Research Center, 1991). There are a large number of variations on this. For example, instead of happiness the respondent may be asked about his or her satisfaction with life as a whole. The wording and number of the response categories may also vary (Veenhoven, 1993 provides a valuable classification of queries on well-being, their wording, and response groupings). As a general matter, people have little trouble answering such questions; in the GSS, for example, the proportion of nonresponses was 0.8% in fourteen surveys conducted between 1972 and 1987.

Measurement issues such as the reliability and validity of the replies, whether respondents report their true feelings, and possible biases resulting from the context in which the question is asked, have been extensively studied in the literature (see Diener, 1984 and Veenhoven, 1993). The general conclusion of such assessments is that subjective indicators such as those used here, though not perfect, do reflect respondents' substantive feelings of well-being -- in the words of psychologist Ed Diener (1984, p. 551), the "measures seem to contain substantial amounts of valid variance."

Besides the meaningfulness of such measures, there is the question of comparability. As phrased, the happiness questions typically leave each person free to define well-being as he or she pleases. How, then, can the happiness of persons be compared? The essence of the answer, suggested by responses to queries as to the sources of happiness, is this: in most people's lives everywhere the dominant concerns are making a living and matters of family life, and it is these concerns that ordinarily determine how happy people are (see the references at the start of this article). In effect, although each individual is free to define happiness in his or her own terms, in practice the kinds of things chiefly cited as shaping happiness are for most people much the same -- probably because most people everywhere spend most of their lives doing the same types of things. This is not to say that the happiness of any one individual can be directly compared with that of another. But if one is concerned with comparing the subj ective well-being of sizable groups of people, such as social classes, this similarity in feelings about the sources of happiness gives credence to such comparison.

Further testimony as to the meaningfulness of the measurement and comparability of the happiness data are the regularities that turn up in the literature. For economists, one of the most notable has been the paradox of happiness, reminiscent of earlier work on saving (Leibenstein, 1976). As far as I am aware, in every representative national survey ever done, the bivariate association between happiness and income is positive. However, over time, as the income of a nation rises, happiness typically remains unchanged (Diener and Oshi forthcoming; Easterlin 1974, 1995; Kenny, 1999).

The life cycle pattern of well-being does not have to follow the national pattern of time series stability. Each generation, for example, might have identical trends of rising wellbeing, but if all started at the same initial level, then the national average would be constant over time. Surprisingly, there is little empirical research either within or outside of economics on life cycle well-being. An early study that used a cohort approach like the present one reached inconclusive results, perhaps because of data incomparabilities and a small number of observations (Rodgers, 1982). One of the leading recent economist-researchers on happiness, Andrew J. Oswald (1997), suggests that in Britain happiness is U-shaped in age with a minimum for persons in their thirties. This generalization, however, is based on cross section data, a questionable guide to change over the life cycle. A survey of cross section studies by Linda George (1992) finds that in the United States before the 1970s older persons were less hap py than younger; since then, they have become happier (cf. also Campbell 1981, ch. 12). Hence, depending on the date chosen, cross section studies may lead to quite different conclusions regarding the life cycle trend in happiness.

3. Data and methods

The measurement of life cycle well-being is based here on the happiness data from the General Social Survey. The happiness question noted in the preceding section was asked in all twenty-one years between 1972 and 1996 that the survey was taken. The life cycle pattern of happiness is obtained by following birth cohorts through the adult ages, linking appropriate age data for successive years, a technique that was originated by demographers a half century ago. Thus to trace the life cycle pattern of subjective well-being of the cohort born, say, between 1941 and 1950, I link the average happiness of those ages 22-31 in 1972 to that of those ages 23-32 in 1973, 24-33 in 1974, and so on. This is sometimes termed a "synthetic" birth cohort approach, to differentiate it from a panel study which seeks to follow exactly the same individuals over time.

The happiness data span a twenty-four year period; hence at best I am able to follow any given birth cohort for only that segment of its adult life cycle. But since I have cohorts in 1972 starting at younger, middle, and older ages, it is possible to form an impression of the pattern over the entire adult life cycle by bringing together the various segments of life cycle experience.

The other principal data source used here -- chiefly to analyze the determinants of subjective well-being -- are Roper surveys that include questions on "the good life." Such surveys have been taken about every three years since 1975 in the United States. In these surveys the questioning procedure is as follows (see appendix for the full survey question):

1. We often hear people talk about what they want out of life. Here are a number of different things. [The respondent is handed a card with a list of 24 items.] When you think of the good life -- the life you'd like to have, which of the things on this list, if any, are part of that good life as far as you personally are concerned?

2. Now would you go down that list and call off all the things you now have?

3. Thinking of your concept of the good life, how good do you think your chances are of achieving it -- very good, fairly good, not very good, or not good at all?

Although only four response categories are specified for question 3, respondents sometimes volunteer that they have already achieved the good life; hence, in what follows, five categories are used.

I have noted that the sources of happiness typically cited in response to open-ended questions are matters of everyday life -- living levels, family circumstances, health, and work. The good life questions are not open-ended, but the list of twenty-four items presented to respondents overlaps substantially the sources of happiness typically cited, falling mainly into three categories -- living levels (a consumer goods group), family concerns, and job circumstances (Table 1). [1] The items most frequently cited as part of the good life are hardly surprising -- a home, a car, a happy marriage, children, and an interesting job. The most important source of happiness omitted in the good life survey is health. Aside from this, the good life questions largely tap the same set of interests as do happiness questions. Moreover, if one studies the variations with age in the good life responses, they are quite similar to those with regard to sources of happiness. Although living level is important at all stages of the l ife cycle, family concerns rise and then decline, and job concerns drop sharply at older ages (Herzog, Rodgers & Woodworth, 1982; Easterlin & Schaeffer, 1999). As shall be seen, there is also a marked similarity between the good life and happiness data as regards both the cross section and life cycle association with income.

Although happiness and the good life are not identical concepts, the terms often come up in the same discussion (Brock, 1993), and the similarities here between the two sets of data - the concerns that they tap and the cross section and life cycle regularities - suggest that they capture rather similar feelings of underlying well-being. Hence, I propose to use these data sets in complementary fashion to study the nature and causes of subjective well-being. The special advantage of the good life data are that they provide, not only an overall indicator of respondents' subjective well-being (the chance of achieving the good life), but also, in questions 1 and 2 above, of their aspirations and attainments. Hence they make possible an exploratory analysis of the roles of both aspirations and attainments in shaping assessments of subjective well-being. Although there are valuable conceptual studies of aspirations, to date there has been very little empirical work.

Of the seven good life surveys conducted between 1975 and 1994, I use primarily two, those for 1978 and 1994. In each of these years, a business cycle expansion was underway and the unemployment rate was an identical 6.1%. Hence, possible effects on the responses of variations in cyclical conditions are minimized (cf. Clark and Oswald, 1994, McLanahan and Sorensen, 1985). In analyzing the data, a cohort procedure is followed similar to that described earlier, but in a simpler and more aggregated way, in order to maintain a reasonable sample size. The age groups used to trace the life cycle patterns are:

early life cycle: the birth cohort of 1950-64 at ages 18-29 and 30-44,

midlife cycle: the birth cohort of 1935-49 at ages 30-44 and 45-59, late life cycle: the birth cohort of 1920-34 at ages 45-59 and 60 and over.

In much of what follows, I shall focus on the early and mid life cycle stages, when income is rising.

The present approach to life cycle study has shortcomings. The composition of synthetic cohorts, unlike panels, is altered somewhat by international migration. Also, the dates and age spans I am using in the good life data are not perfect for following the specified birth cohorts, though I believe they provide a close approximation - as shall be seen, the good life patterns of well-being over the life cycle correspond fairly closely to those indicated by the more precise GSS data. In addition, there may be period as well as cohort effects in both the GSS and good life data. However, the life cycle approximation used here seems considerably better than that given by cross section age data, which, as noted, may give conflicting results depending on the date chosen.

In the GSS arid Roper good life surveys the income data are for pretax household income from all sources. A comparison with the much larger United States Bureau of Labor Statistics' Current Population Survey household income data for 1978 and 1994 shows a close similarity in the median values of total household income. [2] All income data are adjusted to 1994 prices using the Consumer Price Index of the Bureau of Labor Statistics.

4. How well-being varies with income: a new paradox

At a point in time, subjective well-being varies directly with income; over the life cycle subjective well-being is constant, despite substantial growth in income. This new paradox of happiness is evident in the data both on happiness and the chance of achieving the good life.

4.1 The cross section relationship

I start with a description of the simple point-of-time association between happiness and income. In 1994, those reporting themselves very happy ranges from 16% in the lowest income class to 44% in the highest (Table 2, column 2). To avoid relying on only one happiness category, such as the percentage very happy, I have computed a mean happiness rating, which can vary from a minimum of zero to a maximum of four (the procedure is indicated in the table footnote). By this measure, average happiness varies directly with income throughout the income range, from a low of 1.8 to a high of 2.8. [3]

The positive association between subjective well-being and income accords with most economists' theoretical expectations about the ceteris paribus association between income and subjective satisfaction or utility. Although other things are not constant in the present bivariate comparison, this positive relationship invariably appears in national cross section samples (Andrews, 1986, p. xi; Diener, 1984, p. 533) [4]

Because concerns about living level are typically identified as a major source of happiness, it is reasonable to suppose that the causation here runs chiefly from income to happiness, and past researchers have typically taken this view (Davis, 1965, pp. 74-77; Veroff, Douvan & Kulka, 1984, p. 391). Recently, however, some psychologists have played down the role of external circumstances such as income in affecting well-being, and suggested that emotional well-being is a fairly stable personality trait due largely to genetic heritage (Diener & Lucas, 1998; Lykken & Tellegen, 1996). This view would imply that emotional well-being is the cause of income differences in Table 2. It is certainly plausible that personality traits affect income but economic research on the determinants of earnings tends to put other factors in the forefront, such as schooling, training, experience, innate ability, physical health, and inheritance. It seems unlikely that the influence of emotional well-being on income would stand out so clearly in simple bivariate comparisons of the type presented here.

The good life responses are also positively associated with income. Using the same income classes as for the happiness data, one finds very similar patterns. Those who assess their chances of achieving the good life as very good or who volunteer that they have already achieved the good life range from 20% at the lowest income level to 53% at the highest (Table 3, columns 2 and 3). Scoring the responses yields a range for the mean chance of achieving the good life from 1.5 to 2.7. As for happiness, the direct association with income is found throughout the income range.

4.2. The life cycle pattern

When one turns to the life cycle association between subjective well-being and income, the picture is quite different. While cohorts typically manifest substantial improvement in material living levels up to the retirement ages, there is no corresponding advance in subjective well-being (Fig. 1). Nor does the decline of income in the retirement years appear to be accompanied by any change in average happiness. Other studies of the retirement ages have reported that cohort happiness continues to be stable at this life cycle stage (George, 1992). The lack of a life cycle trend in happiness is supported by a regression of happiness on age for each cohort -- there is none with a statistically significant slope. A pooled regression with cohort dummy variables added also shows no significant coefficient.

To assess the life cycle trend in the chance of achieving the good life, I use observations at two points separated by sixteen years in the life cycle of each of the three cohorts identified in section 3. These observations correspond to those regarding happiness that one would obtain at the points in each panel of Fig. 1 demarcated by the vertical lines. To make the good life/happiness comparison precise, I have calculated happiness for the same fifteen-year cohorts as well as the same intervals as in the good life data.

The good life and happiness tends are generally consistent (Table 4). Taking all three life cycle stages together, there is no clear trend up or down, over the life cycle. It is true that mild negative changes predominate in the table, but we know from the much more complete series for happiness in Fig. 1 that these are not significant. The general picture in both data sets is one of a fair amount of stability over the life cycle, and certainly no change corresponding to that in income.

This is not to say that at the individual level subjective well-being is simply a fiat line over the life cycle. Significant changes in one's circumstances -- life cycle events, such as marriage, loss of a job, the birth of a child, and the death of a loved one -- affect subjective well-being, although these effects typically dissipate in the course of time (Kahneman, forthcoming, McLanahan & Sorensen, 1985, Myers, 1992). For a sizeable group of people, such as a ten-year or fifteen-year birth cohort, however, these effects average out, and one is left with the pattern in Fig. 1.

4.3 Past and future well-being and the life cycle saving hypothesis

The most obvious theoretical reason for the life cycle stability in welfare is that households, in the absence of a financial constraint, adjust their consumption patterns to achieve a stable level of well-being throughout the life cycle. But if people behaved like this, one would expect that individuals, when asked how their past and prospective happiness compares with the present, would report little change. As it turns out, this is not the case -- on average, people think that they will be better off in the future than at present, and that they are better off today than in the past. (I am talking here, not of very short term changes such as a year or less, but of longer term comparisons.) The most comprehensive evidence of this, by far, comes from a survey conducted by social psychologist Hadley Cantril (1965) in fourteen countries with highly diverse cultures and at widely different stages of economic and political development. Respondents, after indicating their present happiness level on an integer sca le from zero to ten, were asked where on the scale they were five years ago, and where they think they will be five years hence. In every country in every age group from 18 to 29 to 50 and over, respondents rated their prospective happiness higher, and their past happiness less, with only a few trivial exceptions (Table 5). Older respondents saw, on average, smaller changes than younger.

Time series data for the United States confirm the evidence of Cantril's international cross section. The same question was asked in 36 surveys in the 26-year-period from 1959 to 1985 (Lipset & Schneider, 1987, pp. 130-131). In every survey respondents expected, on average, to be happier in the future, and felt that they had been worse off in the past, there being only three small exceptions in the present/past comparison. As in the international data, future changes were envisaged to be greater than past. But in fact, over the entire period present happiness was, on average, constant.

Based on the responses on past and prospective happiness, one might conceivably argue that people adjust their consumption patterns to attain, not constant, but steadily improving well-being over the life cycle. But this interpretation is contradicted by the stability in the welfare assessments given by people when actually queried at successive stages of the life cycle as to their present happiness. One cannot have it both ways. If the life cycle theory is assumed to predict stable well-being, it is contradicted by views on past and future wellbeing; if it is assumed to predict rising well-being, it is contradicted by reports on actual well-being. These data thus contradict the life cycle theory. At the same time they present a new empirical puzzle -- why people typically think they were worse off in the past and will be better off in the future.

5. Aspirations, attainments, and subjective well-being

I have noted three empirical regularities that need to be explained. At a given time those with higher incomes are happier, on average, than those with lower incomes. Also at a point-in-time, respondents typically feel that they were less happy in the past and will be happier in the future. The tentative explanation, to which I now turn, involves taking account, not only of people's income, or more generally, their attainments, but also their aspirations, and how both aspirations and attainments vary at a point-in-time and over time.

5.1 The cross section relationship

The idea that behavior is motivated by the pursuit of targets is common in economics, ranging from stock adjustment models of firms' investment behavior to households' family building behavior. Its counterpart in the literature on subjective well-being is a goal fulfillment model. [5] Individuals are viewed as striving after certain goals, and the more successful they are in obtaining them, the happier they are. Differences among persons in subjective well-being may thus arise from differences in their goals or aspirations, in what they have (their attainments), or the balance between the two. In what follows, I use this conceptual approach to analyze in a rudimentary way the observed cross-sectional and life cycle patterns in subjective well-being. I take the number of consumer goods that a respondent cites as part of the good life as an indicator of the person's target (the desired living level), the number that the respondent has as a measure of attainments (the achieved living level), and the respondent' s judgment of the chance of achieving the good life as an indicator of his or her subjective well-being. As has been noted, living level -- proxied here by certain consumer goods -- is not the only concern affecting well-being. Moreover, the number of consumer goods in the good life list is not a comprehensive measure of material aspirations. Although a few important consumer durables are included, many consumer goods are omitted. In addition, two respondents who specify the same consumer good as part of the good life, such as "a home of your own," may have quite different conceptions of the value or price of that good. Thus, the measure of material aspirations used here provides some indication of the range of consumer goods desired by a respondent, but tells us nothing about the specific characteristics of each good that the respondent has in mind. Nevertheless, the measure is a start on quantifying material aspirations, and turns out to provide, I believe, suggestive insights into the paradoxical patterns of happiness. [6]

I start again with the point-of-time relationship. The range in the number of consumer goods that individual respondents cite as part of the good life ranges from as low as zero to as high as the maximum of ten, with mean numbers of 4.2 in 1978 and 5.4 in 1994 (Table 6). The number people actually have also ranges from zero to ten, but the averages are lower -- 2.4 in 1978 and 2.9 in 1994. The shortfall from the desired number ranges between zero and ten, with the average shortfall amounting to about 2.0 -- slightly less at the earlier date, somewhat more at the later.

Given the variability in responses, it is of interest to ask: if respondents are arranged from low to high in terms of their perceived chance of achieving the good life, does any systematic pattern appear in consumer goods desired, in the number people have, or the difference between them -- the shortfall of what they have relative to the number desired? For example, do those who have a greater shortfall of goods on hand relative to their target usually assess their chances of achieving the good life more unfavorably? Are favorable assessments typically related to lower desires? To having more goods?

Bivariate correlations suggest that a greater shortfall in attaining one's material goals is, in fact, significantly associated with a lower perceived chance of achieving the good life (Table 6, columns 2 and 4). Also, the fewer the goods one has, the lower one's assessment of the outlook for the good life. But for consumer goods aspirations the picture is mixed. In 1994, there is no significant relation between the number of consumer goods desired and the perceived chance of achieving the good life. In 1978 there is, and it is in the direction that one would expect -- lower desires going with higher assessments of achieving the good life -- but the correlation coefficient is somewhat smaller than for the other two variables.

These results point to the tempting conclusion that in determining judgments of well-being it is largely differences in what people have that is crucial, and differences in aspirations do not matter very much. If, for example, aspirations vary randomly throughout the population, then differences in what people have determines the shortfall in attainment of desires and thus subjective well-being. Moreover, since the goods people have depend largely on their income, then perhaps one can dispense altogether with aspirations and simply consider income as the principal variable explaining well-being. Indeed, the correlation coefficients between the perceived chance of achieving the good life and income are about as high, on average, as those with the shortfall in the goods people have relative to their aspirations (Table 6, panel B). This result is consistent with the view that, so far as economic factors are concerned, income is sufficient to explain subjective well-being, and information on aspirations and the s hortfall relative to aspirations does not add anything.

But why do aspirations have so little effect in accounting for differences in wellbeing? Is it true that consumption targets do not vary systematically among respondents? The answer to this appears to be largely yes. If one looks at the relation between the number of consumer goods desired and respondent's level of education within each of four age groups, there is little evidence of a significant association (Table 7). The relationship between desires and income is somewhat more mixed -- at younger ages there is usually no relation, but at older ages, there is typically a positive association. In the correlation with education too there is a hint of this shift between younger and older ages, although the correlations at older ages are usually not significant. So far as it goes, the evidence here would seem to indicate that, on balance, differences in material aspirations by socio-economic status are rather small.

This impression of limited variation in material aspirations is underscored by data from surveys of high school seniors' aspirations, which provide an idea of material goals at the start of the adult ages. In these surveys, respondents are asked, among other things, about the future importance to them of twelve consumer goods that are very much like those named in the good life list. [7] The difference in importance of individual goods is very small between those who do and do not plan to attend college, averaging a mere one percentage point in 1976 and 3 percentage points in 1995 (Table 8). These data strengthen the impression that individuals from different socio-economic backgrounds enter the adult ages with quite similar goals. (Wilson, 1996 argues similarly based on rather different evidence.)

This is not to say that material aspirations are identical for those from different socioeconomic origins. I have already noted that there may be differences in the kinds of goods respondents have in mind when citing a home, car, and the like, as part of the good life. It is plausible to suppose that there are systematic differences by socio-economic status in these characteristics. Nevertheless, the similarity is striking in the broad structure of consumption aspirations suggested by the good life data, and it is this similarity that explains the relatively small part played by aspirations in explaining point-of-time differences in the chance of achieving the good life. However, before aspirations (as measured here) are dismissed as irrelevant to subjective well-being, it seems desirable to look at changes over the life cycle. There is still the conundrum posed by the life cycle data -- income, which is important for well-being at a point-in-time, seemingly has little impact on well-being over the life cycl e.

5.2. The life cycle pattern

At a point in time, subjective well-being is positively associated with higher income and the larger number of consumer goods that go with it. Over the life cycle, however, the association between well-being, on the one hand, and income or consumer goods, on the other, does not hold. In the good life data, for example, between the beginning and end of the early stage of the adult life cycle, the average number of consumer goods owned per household increases from 1.7 to 3.1, while the mean chance of achieving the good life declines slightly (Table 9, panel A). The same pattern appears in the mid life cycle stage -- a rise in material possessions, and a slight decline in perceptions of prospects for the good life (panel B).

It could be that noneconomic factors account for this seeming anomaly. But a more immediate economic explanation is suggested by the data on consumer goods aspirations. In both the early and mid life cycle stages consumer goods desires increase along with consumer goods holdings, and by roughly the same order of magnitude (panels A and B). As a result, virtually no inroads are made on the fulfillment of material aspirations -- the shortfall at the end of each life cycle stage is just about as great -- if not greater -- than at the beginning.

But suppose aspirations did not change -- what then would happen to the shortfall in attainment of desires? To answer this we can compare the number of consumer goods owned at the end of each life cycle stage with the number desired at the beginning. When the early life cycle cohort starts out, for example, the mean number of consumer goods desired is 4.4; the number owned, 1.7; and the shortfall, 2.6 (Panel A). Sixteen years later, the number of consumer goods owned has risen to 3.1 and, if the number desired had remained unchanged at 4.4, the shortfall would have been cut from 2.6 to 1.2 (Panel D). Similarly, the shortfall for the mid life cycle cohort would have been reduced from 1.8 to 1.0 (ibid.). Thus, the rise in income during the working ages would have meant substantial progress toward the good life, if goods aspirations had remained unchanged. In fact, however, aspirations rose and the shortfall relative to desires remained about the same.

These findings bear directly on the paradox of happiness -- the contradiction between the cross section and life cycle relations between happiness and income. Subjective well-being depends on the extent to which aspirations are fulfilled. Those with higher income are better able to achieve their material aspirations, and, since aspirations vary fairly little by socioeconomic status at a point-in-time, higher income means, on average, greater subjective well-being. Over time, however, aspirations trend upward, and this rise in aspirations negates the effect of rising income, so that subjective well-being is unchanged. Even though rising income over the working ages of the adult life cycle means that people can have more goods, the favorable effect of this on welfare is erased by the fact that people want more as they progress through the life cycle. It seems as though Ralph Waldo Emerson (1860) had it right: "Want is a growing giant whom the coat of Have was never large enough to cover."

5.3. Past and future well-being

So far I have considered the cross section and life cycle patterns of well-being. There remains the question why people typically report that they were less happy in the past and will be happier in the future. Although the answer to this again turns on changing aspirations, it goes beyond the present data set. It is easiest to handle as part of a speculative interpretation of all three empirical regularities suggested by the foregoing evidence on material aspirations, attainments, and subjective well-being.

Assume that at the start of the life cycle people in different socio-economic classes have a common set of material aspirations, say, [A.sub.1]. Then, with aspirations essentially the same, those with higher income will be better able to fulfill their aspirations and, other things equal, will, on average, feel better off (Fig. 2, compare points 1, 2, 3 on the utility function corresponding to the aspiration level, [A.sub.1]). This is the point-of-time positive association between happiness and income.

If income rose and material aspirations were constant, then individuals would move upward along the [A.sub.1] utility function in Fig. 2, experiencing increasing levels of well-being, progressing, for example, from point 2 to point 3, with well-being rising from [u.sub.m] to [u.sub.2]. If, however, income remained constant and aspirations rose to say, [A.sub.2], then the shortfall of what people have relative to their aspirations would grow, and the satisfaction associated with a given level of income would diminish. Thus, an individual whose income is, say, [y.sub.m], would experience a level of satisfaction [u.sub.m] if she were on the utility function corresponding to aspiration level [A.sub.1](point 2), but a lower level of satisfaction, [u.sub.1], if she were on the utility function corresponding to the higher aspiration level, [A.sub.2](point 4). In reality, individuals typically move from point 2, neither to point 3 nor point 4, but to point 5. This is because both income and aspirations rise, with rou ghly offsetting effects on well-being. This is the observed life cycle stability in well-being, resulting from the countervailing effects of rising income and aspirations.

How does one explain people's views on their past and prospective welfare? The key to the answer is to recognize that these are point-of-time responses and are consequently based on the material aspirations that people have acquired at that point in time. Consider, for example, an individual who has moved from point 2 to point 5, with income growing from [y.sub.m] to [y.sub.2] and aspirations rising from [A.sub.1] to [A.sub.2]. When asked at point 5 how well off he was in the past, his judgment is based on his current higher level of aspirations, [A.sub.2], not on the lower level of aspirations he actually had in the past, [A.sub.1]. Because his aspirations have risen he evaluates his previous income, [y.sub.m], on the basis of his new utility function, [A.sub.2], and sees [y.sub.m] as yielding the satisfaction level, [u.sub.1] (point 4). When he was actually at [y.sub.m], however, his material aspirations were lower, and he enjoyed the higher happiness level, [u.sub.m] (point 2 on the utility function [A.su b.1]).

The assessment of one's future well-being is similarly premised on one's material aspirations at the time the question is asked. A person at point 5 on the utility function [A.sub.2] who anticipates a growth in income to [y.sub.3] will envisage an improvement in welfare from [u.sub.m] to [u.sub.2], that is, an upward movement along the [A.sub.2] function from point 5 to point 6. What she does not know is that when she gets to [y.sub.3] she will have, not just higher income, but higher material aspirations as well, and be on the utility function corresponding to the higher aspiration level, [A.sub.3]. Thus, she will end up at point 7, not point 6, and experience about the same level of satisfaction, [u.sub.m], that she did at point 5. Experiments by social psychologists Kahneman and Snell (1991) lend support to this conceptual view. They report that "the dominant heuristic [to predict future tastes] is to consult current desires" and that "there was little or no correlation between the predictions of hedonic change that individuals made and the changes they actually experienced" (pp. 187, 189).

The distinction drawn by psychologists between decision utility and experienced utility is illustrated clearly here (Kahneman, Wakker & Sarin, 1997; Tversky & Griffin, 1991). Decision utility is the perceived (ex ante) satisfaction associated with choice among several alternatives; experienced utility is the satisfaction realized (ex post) from the outcome actually chosen. When asked about well-being five years ago or five years hence, a person at point 5 with income [y.sub.2], on utility function [A.sub.2], can be thought of as telling us how she would feel today if she had the income [y.sub.m] (worse off) or [y.sub.3] (better off). This is her decision utility. It explains, for example, why she says she would not want to go back to her old lower-paying job (point 4) and why she may take a new higher-paying job (point 6). However, if she does take the higher-paying job and her income goes up, her aspirations too will rise. Hence, when asked how happy she is when she has income [y.sub.3] -- her experienced ut ility -- she turns out to be at point 7, not point 6.

Economists tend to assume that decision utility and experienced utility are the same. The present analysis suggests that there is a mechanism at work that makes them systematically different (see also Kahneman forthcoming, and the excellent review of the social psychology literature by Rabin 1998, demonstrating how subjects fail to predict accurately both their prospective and past utility, that is, their experienced utility). If one's interest is merely in the choices determining behavior, then decision utility is enough. But if one is interested in the welfare effects of behavior, then experienced utility comes to the fore.

6. Aspirations, attainments, and subjective well-being by level of education

I have noted that at young adult ages material aspirations differ little by level of education. We also know, as a general matter, that income -- which is crucial to the fulfillment of material aspirations -- varies positively with education. [8] Hence, by dividing the early, mid, and late life cycle cohorts according to level of education, it is possible to observe more fully the interplay between aspirations and attainments in determining the cross section and life cycle patterns of well-being. This analysis also provides useful input for the following section on the growth of aspirations.

Each educational cohort can be viewed essentially as a sample of the same group of individuals at the beginning and end of each life cycle stage, because for most adults, years of schooling, like gender and race, remain largely the same over the life cycle. The analysis is necessarily more approximate than the previous one for several reasons: the sample size is smaller, misreporting of educational level may be a problem, and a small proportion of individuals do shift from the lower to the higher educational cohort as a result of ongoing education. [9] Despite these shortcomings, some suggestive regularities appear.

6.1. Cross section relationship

To turn first to the point-of-time differences, both at the beginning and end of each of the three life cycle stages, those with more education are typically happier than those with less (Table 10, panel A). Consistent with this, those with more education assess their chances of achieving the good life more favorably, on average, than those with less (panel B).

These point-of-time differences in subjective well-being by level of education are replicated in the shortfall of consumer goods -- for those with more education, the shortfall is invariably smaller (Table 11, panel C). The source of the differences in the shortfall between those with more and less education is chiefly the number of consumer goods owned -- those with more education and, thus, more income, consistently have more consumer goods than those who have less education (panel B). In the case of aspirations, there is less evidence of a systematic difference between the two educational groups (panel A). All in all, these cross-sectional differences by education are reminiscent of those described earlier for the population more generally where income and number of goods owned were found to chiefly explain differences in subjective well-being (Table 6).

6.2. The life cycle pattern

When one turns to change over the life cycle, the picture is once again altered. In the early and mid life cycle stages, when income rises substantially, the number of consumer goods owned also rises - more so for the higher educational group, the one whose income rises more (Table 11, panel B, lines 1, 2, and 3). For neither educational group, however, is there any improvement in the perceived chance of achieving the good life - if anything, the change is slightly downward (Table 10, panel B, columns 1-4). The explanation, once again, is the rise in material aspirations - the number of consumer goods wanted rises for both educational groups, but more for the better than the less educated (Table 11, panel A, lines 1 and 2). Moreover, the rise in aspirations just about matches the rise in the number of consumer goods owned. As a result, for each educational group there is no reduction in the shortfall between the beginning and end of each life cycle stage (panel C, lines 1 and 2). If, however, desires had rem ained the same as at the beginning of each life cycle stage, the reduction in the shortfall would have been substantial, and greater for the better educated group (panel D).

6.3. Interpretation

Fig. 2 can be used to interpret these patterns by level of education. Suppose that at the start of the early stage of the life cycle, those with more and less education are both on the same utility function, sharing a common set of aspirations, [A.sub.1]. Because those with more education earn a higher income than those with less - say, [y.sub.m] compared to [y.sub.1] - their subjective well-being is correspondingly greater, the differential equaling ([u.sub.m] - [u.sub.1]. As each group progresses through the life cycle incomes tend to rise, and, if aspirations remained unchanged, both would move upward along the [A.sub.1] utility function, enjoying greater well-being. But aspirations also increase. If the aspirations of both groups grew identically, putting them, say, on the A2 utility function, then the disparity in well-being would grow to [u.sub.2] - [u.sub.1] because of the greater growth in income of the more educated group, from [y.sub.m] to [y.sub.3] while that of the less educated increases from [y .sub.1] to [y.sub.m]. But because the aspirations of the better educated group rise even more - putting them on the [A.sub.3] utility function when the less educated are on [A.sub.2] - the disparity in well-being remains unchanged at ([u.sub.m] - u[u.sub.1]). Thus, the utility of each group ends up about the same as at time 1, the positive effect on well-being of higher income growth of the better educated being counterbalanced by the negative effect of the greater growth in their aspirations.

The foregoing makes clear how education influences subjective well-being. Although more and less educated people start with rather similar material aspirations, more education confers an advantage in terms of higher levels of income. As a result, at any given time, those with more education enjoy higher levels of well-being than those with less. But the greater growth in life cycle income of the more than less educated does not result in widening the gap in well-being, because material aspirations also rise more for the better educated. Thus, more education through its effect on income makes, on average, for consistently higher well-being among those with more education, but not for an upward trend in their relative well-being.

7. What drives the growth in material aspirations?

If rising material aspirations are responsible for offsetting the life cycle effect of income on well-being, then the question naturally arises, what causes the growth in aspirations? Although the literature indicting mass consumerism sees advertising, TV, and the like as responsible, I shall suggest that a more important part of the mechanism is that desires tend to grow directly as a result of the growth in income and the greater number of goods that higher income brings. In the words of one of the founders of modem sociology: "[T]he more one has, the more one wants, since satisfactions received only stimulate... needs" (Durkheim, 1930, 1952, p. 248; cf. also March & Simon, 1968). [10] In keeping with this, Rainwater (1990) found that in the United States the income perceived as necessary to get along rose between 1950 and 1986 in the same proportion as actual per capita income.

One bit of evidence to this effect in the present data has previously been noted -- the correlation between the number of consumer goods desired and income becomes increasingly positive with age. At the start of the life cycle desires are not correlated with income (see Table 12, which recasts the correlations of Table 7 in life cycle form). By the end of the early life cycle stage, however, a significant correlation has emerged -- those with higher income having higher aspirations. This pattern of increasing positive association is repeated in every life cycle stage, with the strength of the association trending upward over the life cycle.

Correlation is not causation, of course. Perhaps material aspirations, by stimulating motivation, are driving the acquisition of income, rather than the reverse. But if aspirations were the cause and income the effect, then the life cycle differences between educational groups just noted would be unlikely to occur. Those with less education start out with aspirations not much different from those with more. Hence, the two educational groups should be equally motivated to increase their income and acquire goods. In fact, income of the more educated group and the number of consumer goods that they acquire rise more rapidly than for the less educated group in every life cycle stage (Table 13, column 1). Moreover, in every life cycle stage, the aspirations of the more educated group rise more than those of the less educated group (column 2). Thus, although the two educational groups start with similar material desires, the aspirations of the more educated group rise more rapidly. This is consistent with a causal view in which better education leads to greater income growth and this, in turn, results in a larger increase in material aspirations.

The psychological mechanism implicit in this view of the determinants of aspirations is suggested by the well-known ring toss experiment in which individuals -- given free choice of how close to stand to the peg -- are found to set their aspirations in proportion to their abilities. Then, as they get better at the ring toss, they tend to move farther away. Increasing skill is thus matched by increasing aspirations, in much the same way that increasing ability to get goods is matched by rising material aspirations.

One question remains -- how to explain the similarity in material aspirations among those of different socio-economic status at the start of the life cycle? After all, those with more schooling typically come from more affluent backgrounds; hence, one would suppose that they would start out with higher material aspirations as well. This intergenerational influence on aspirations is doubtless a real one, and, one could argue, is simply not captured in the measure of material aspirations used here. As was mentioned, the characteristics of the "home" envisaged as part of the good life probably differ among those from different socio-economic backgrounds.

However, family background is not the only factor shaping the material aspirations of the young; the importance of peer influences, especially in the preadult years, is widely recognized. These peer influences typically make for a commonality in aspirations by socioeconomic status. In the preadult ages, those from different backgrounds intermingle to a fair extent -- at school, in sports, in recreational activities such as rock concerts, and at work, where they may hold the same jobs, such as fast food vendors. They often watch the same television programs and movies, see the same advertisements, and the extent of their media exposure is similar. [11] These common experiences and social contacts make for more similar aspirations by socio-economic status than if family background were the only factor. Once people enter the working ages, however, the experiences and contacts shared by those of different socio-economic status diminishes. Those who go on to college are embarked on a different career trajectory, a nd have limited contact in the workplace with those who do not share the same educational background. Their higher income makes for residential segregation and less social contact as well. Although the experiences of others continue to influence aspirations, it seems likely that throughout the socio-economic spectrum, reference groups, over the course of the life cycle, become increasingly narrower than in the preadult years, and more confined to those of similar socio-economic status. As a result, the factors making in the preadult years for similarity in aspirations among those from different socio-economic backgrounds become progressively less salient over the course of the adult life cycle.

This reasoning can be tied to the more general theoretical literature in psychology and economics on the formation of aspirations or preferences. In psychology, two broad sets of factors are widely recognized as influencing aspirations -- one's past personal experience and the experience of others, corresponding respectively to adaptation level theory and social comparison theory. [12] The counterparts in economics of these two conceptions are habit formation models and theories of interdependent preferences (Brown, 1994, Day, 1986, Duesenberry, 1949, Frank, 1985a,b, 1999, Modigliani, 1949, Pollak, 1970, 1976, Tomes, 1985). Both sets of theories stress that judgments are formed by comparison -- in the first case with one's past experience; in the second, with the experience of others.

I am suggesting here that while both influences are always at work in shaping material aspirations and judgments of well-being, their relative importance shifts over the course of the life cycle. In the preadult years social comparison over a wide socio-economic spectrum plays a relatively larger part than personal background in shaping aspirations. In the adult years, as individuals with different educational backgrounds embark on relatively segregated socio-economic tracks, past personal experience becomes more important and social comparison influences are increasingly confined to a reference group comprised of those of one's own socio-economic status. Hence, material aspirations start out much more similarly among those from different socio-economic backgrounds than is true later in the life cycle, when one's personal income experience and that of others on the same track becomes the major driving force behind material aspirations. I believe the evidence presented here on aspirations is reasonably consis tent with this view: at the start of the life cycle, aspirations are fairly similar among different socio-economic groups, but over the life cycle, they increasingly diverge.

8. Summary

I have tried in this paper, first, to get some idea of the real world nature of the life cycle pattern of subjective well-being. To this end, I have used the accumulating social survey data on happiness by age to trace the subjective well-being of birth cohorts throughout their adult years. The result is straightforward: subjective well-being is, on average, remarkably constant throughout the entire adult life cycle.

These data also show the well-established positive relation between subjective well-being and income at a point in time. Because income rises throughout most of the working ages and then, in retirement, levels off or declines slightly, one might have expected that the life cycle pattern of well-being would follow a similar course. But this is not the case -- hence we have a new "paradox of happiness" -- the contradiction between the cross section and life cycle relation of happiness to income.

It is possible that other factors overwhelm the effect of income on happiness over the course of the life cycle. Yet, the effect of income is certainly not overwhelmed in the cross section. Moreover, when people are asked about the sources of their happiness, they put their living level at or close to the top of the list, and this ranking persists at all points in the life cycle.

Another possibility is that the well-known life cycle theory of saving applies here. Although income varies over the life course, people use their supposedly ready access to credit to stabilize their consumption stream and achieve constant subjective well-being. But this hypothesis is contradicted by how people actually view their past and prospective happiness. Almost invariably they think that they were worse off in the past, and will be better off in the future.

Thus, the real world evidence on subjective well-being presents several generalizations calling for explanation. Why at a point in time is subjective well-being positively associated with income? Why does well-being remain constant over the life cycle, while income rises? Why do people think that they were less happy in the past than at present, and will be even happier in the future?

These questions, relating to the determinants of subjective well-being, are the second principal concern of this paper. In seeking answers, I use a new data set that I hope advances the explanation of subjective well-being a little beyond the purely conjectural. The data are from Roper surveys that include questions about the good life. The answers to these questions provide information on material aspirations and their attainment -- which of various consumer goods form part of the good life and which goods respondents actually have. This is an imperfect measure of material aspirations, but almost no empirical work has been done on trends in real world aspirations, and this is, perhaps, a start.

The Roper survey also obtains people's assessments of their chances of achieving the good life. Although the good life and happiness are not identical concepts, they share certain similarities. Most importantly for my purpose, both data sets exhibit the present paradox of happiness.

I conjecture with, I believe, some support from the good life data, that the answers to the three questions above are these. First, at a point in time differences in aspirations by socio-economic status are limited and less than differences in income. Those with higher income thus come closer to realizing their aspirations and are happier. Second, as income rises over the life cycle so too do aspirations, negating the positive effect of income on well-being. One reason to think that the growth in income is, in fact, causing the growth in aspirations is that, while the income of the more educated grows more over the life cycle, so too do their aspirations. Correspondingly, the point-of-time correlation between aspirations and income -- which is not significant at the start of the life cycle -- is significantly positive at the end of the life cycle. The pattern of change over the life cycle in aspirations by socio-economic status suggests that of the two influences shaping consumption aspirations -- comparisons with others and with one's past experiences -- the former is more salient early in the life cycle, and the latter, later on.

With regard to the third issue posed by the data on subjective well-being -- past and prospective happiness -- I believe that the key is to recognize that assessments of past and prospective happiness are based upon the respondent's aspiration level at the time the question is asked. Because both income and aspirations grow over time, respondents assess their earlier lower levels of income more unfavorably than they did when they were actually at the lower income levels, and had lower aspirations. Also, when asked about future happiness they assess prospective higher levels of income more favorably than when they actually reach those levels, because they fail to anticipate the rise in aspirations that higher income will bring about. This conclusion is more conjectural than the prior two because it cannot be wholly tested with the present data. It is, I believe, consistent with experimental studies in social psychology indicating that judgments about past and prospective hedonic states are based on current de sires, and are typically incorrect.

The effect of changing aspirations on assessments of past and prospective well-being underscores the importance of the distinction drawn by psychologists between decision (ex ante) utility and experienced (ex post) utility. Although economists tend to assume that the two are the same, the present analysis suggests that shifts in aspirations make them systematically different. As a result, the choices underlying behavior do not yield their expected welfare effects.

The present paper is clearly only a start on the subject of life cycle well-being. I have tried here to present a new data set that I believe is relevant to the empirical study of aspirations -- one giving some idea of people's notions of the good life -- and to form an initial idea of the content of this data set, using descriptive measures.

Also, I have focused on the relation of subjective well-being to living levels and income. I have done this, not only because it is of central interest to economists, but because I believe that in the era of modern economic growth this is where much of the action is. But other determinants of well-being need to be investigated systematically. There is, for example, the evidence in the present data that in the retirement years well-being is stable, despite some decline in income. It is plausible to suppose that this is partly connected with the importance of work to well-being. Although close to two-thirds of people want an interesting job, less than one-third say that they have one. Giving up uninteresting work may boost one's happiness in the retirement ages.

Finally, although I have drawn here in a limited way on research in other disciplines, there is need for better integration of the two strands of empirical inquiry into subjective wellbeing -- that based on social surveys and that using social experiments both within and outside of economics. Indeed, one of the great appeals of the systematic study of well-being is that it breaks the bonds of disciplinary constraints.

Acknowledgments

I am grateful for the excellent assistance of Donna H. Ebata and John Worth, and for helpful suggestions to Richard H. Day, Nancy Easterlin, Timur Kuran, Jim Martin, Bentley McLeod, Vai-Lam Mui, Jeffrey Nugent, Lynwood Pendleton, and James Robinson. Financial support was provided by the Andrew W. Mellon Foundation and the University of Southern California.

(*.) Tel.: + 1-213-740-6993.

Notes

(1.) There are nineteen items in Table 1. I deleted one item from the list of 24 -- a college education for myself -- because schooling is already completed for almost all respondents. I also reduced five queries on specific numbers of children to one or more children.

(2.) All three sources also give similar levels of average household size in 1978. However, in 1994, the Roper good life survey reports a somewhat larger household size than the other two. Because of this, the change in income per household member in the good life survey is biased somewhat downward relative to the other two.

(3.) Oswald (1997, p. 1817, n. 5) is critical of the use of one happiness category, such as the percentage very happy. The present scoring technique is common in the literature (cf. Herzog, Rogers, and Woodworth, 1982; Veenhoven 1993).

(4.) Not surprisingly, the association is weakened when other factors are controlled that are positively associated with income, such as education and unemployment (cf. Diener 1984, p. 553; Veroff, Douvan, and Kulka, 1981, pp. 466-467).

(5.) See Michalos (1986, 1991) for an overview and testing of such models in psychology, and March and Simon's (1968) general model of adaptive motivated behavior. De la Croix (1998), building on Ramsey (1928), presents a formal economic model of well-being, using this approach.

(6.) One of the few studies that investigates the relationship between specific consumer goods and well-being is Oropesa 1995, but the issues addressed are different from those here.

(7.) Specifically, the question is: Looking toward the future, how important would it be for you to have each of the following things? (Johnston, Bachman & O'Malley, 1997, p. 156).

(8.) For a review of recent studies of the relation between education and income, see Ashenfelter and Rouse, 1999. The authors' survey concludes that education has an important causal impact on income independently of ability and family background.

(9.) Between the beginning and end of the early life cycle stage, the proportion reporting some college education rises from 43 to 56%, and, in the mid life cycle stage, from 41 to 49%. In the late life cycle the proportion declines slightly, from 32 to 28%.

(10.) Hirsch, 1976, p. 61 discusses how the fulfillment of given wants generates new and higher order wants. Cf. also Leibenstein, 1976, p. 197. Recent studies of mass consumerism are Ackerman et al. 1997; Belk 1995; Fine and Leopold, 1993; Goodwin, Ackerman, and Kiron, 1997; Miller 1995; Schor 1998; Strasser, McGovern, and Judt, 1998. An excellent empirical study of trends in American consumption expenditures is Lebergott 1993.

(11.) For example, in 1995, among high school seniors who planned to attend 4 year colleges, about 70% watched TV almost every day; for those not planning to attend, the figure is 76% (Johnston et al., p. 98).

(12.) Ahuvia and Friedman 1998, Brickman and Campbell 1971, Helson 1964, Myers 1992, Olson, Herman, and Zanna, 1986. Kahneman (forthcoming) points out that adaptation level and aspiration level are two different concepts. It seems likely, however, that they change in tandem. As one adapts to improved performance at the ring toss, aspirations correspondingly increase.

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                     Percent of population identifying
                 specified item as part of good life, 1994
Consumer goods
  A home you own                90
  A car                         77
  A yard and lawn               63
  A color TV set                58
  Really nice clothes           48
  A second car                  46
  A vacation home               44
  Travel abroad                 43
  A swimming pool               37
  A second color TV set         34
Family
  A happy marriage              77
  One or more children          66
  A college education for my
  children                      62
Job
  A job that is interesting     63
  A job that pays much more     63
  than the average
  A job that contributes to the 42
  welfare of society
  A four day work week          30
  A five day work week          25
Other
  A lot of money                63
(number of cases)               (1943)
Note: Within each category, items are listed by rank.
                   Percent distribution of population by
                happiness at various levels of income, 1994
Total household income (1)        (2)   (3)    (4)     (5)
(1994 dollars)         Mean
                       happiness  Very  Pretty Not too (Number
                       rating [a] happy happy  happy   of cases)
All income groups      2.4        28    60     12      (2627)
75,000 and over        2.8        44    49      6      (268)
50-74,999              2.6        36    58      7      (409)
40-49,999              2.4        31    59     10      (308)
30-39,999              2.5        31    61      8      (376)
20-29,999              2.3        27    61     12      (456)
10-19,999              2.1        21    64     15      (470)
Less than 10,000       1.8        16    62     23      (340)


Source: General Social Survey, Question 154. "Don't know" and "no answer" responses are omitted.

(a.)Based on score of "very happy" = 4, "pretty happy" = 2, "not too happy" = 0. The usual scoring is 3, 2, 1; I have chosen a scale from zero to four, so that the possible maximum and minimum happiness scores (4, 0) are the same as for the chance of achieving the good life (Table 3).
                    Percent distribution of population
                      by chance of achieving the good
                  life at various levels of income, 1994
Total household       (1)        (2)      (3)  (4)    (5)      (6)
income (1994 dollars)                                          Not
                      Mean       Already  Very Fairly Not very good at
                      chance [a] achieved good good   good     all
All income groups     2.2        11       22   47     16        4
75,000 and over       2.7        15       38   46      1        0
50-74,999             2.4        10       31   51      8        0
40-49,999             2.4        12       27   50      8        3
30-39,999             2.3        10       26   51     12        1
20-29,999             2.1        14       13   50     19        4
10-19,999             1.9        11       11   44     28        5
Less than 10,000      1.5         5       15   29     26       26
Total household       (7)
income (1994 dollars) (Number
                      of
                      cases)
All income groups     (1528)
75,000 and over       (102)
50-74,999             (211)
40-49,999             (214)
30-39,999             (290)
20-29,999             (264)
10-19,999             (298)
Less than 10,000      (149)
Source: Roper Survey 95-1. Don't know and no
answer responses are omitted.
(a.)Based on score of "already achieved"=4 to
"not good at all" = 0.
                       Mean chance of achieving the
                       good life and mean happiness
                     at specified life cycle stage [a]
                                 (1)           (2)
                                 Start of life End of life
                                 cycle stage   cycle stage
A. Early life cycle
   Chance of achieving good life 2.3           2.1
   Happiness                     2.4           2.3
B. Mid life cycle
   Chance of achieving good life 2.3           2.1
   Happiness                     2.5           2.4
C. Late life cycle
   Chance of achieving good life 2.3           2.4
   Happiness                     2.5           2.4


Source: See Tables 2 and 3.

(a.)Early life cycle is from ages 18-29 to 30-44; mid life cycle is from ages 30-44 to 45-59; late life cycle is from ages 45-59 to 60+. The starting date for each life cycle stage is 1978; the end date, 1994. Mean values are computed using the scales in note a of Tables 2 and 3.
                    Past and future happiness compared
                  with present happiness rating, by age,
                            14 countries, 1965
Age group Past versus present
          Number of           Number     Mean difference,
          observations        rating per present minus
                              lower      past
18-29     14                  14         1.0
30-49     22                  22         0.8
50+       14                  12         0.6
65+        4                   2         0.1
Age group Future versus present
          Number of             Number        Mean difference,
          observations          rating future future minus
                                higher        present
18-29     14                    14            2.2
30-49     22                    22            2.0
50+       14                    13            1.3
65+        4                     4            0.4


Source: Cantril (1965), PP. 365-377. An observation is the mean happiness value for an age group in a country. The questioning procedure is of the following nature. Respondents indicate where they currently are on a ladder with rungs from zero to ten, where ten is "completely happy" and zero is "unhappy." They then indicate where on the ladder they stood five years ago and where they think they will be five years hence (ibid., p. 23). The countries included are Brazil, Cuba, Dominican Republic, Egypt, India, Israel, Japan, Nigeria, Panama, Philippines, Poland, United States, West Germany, Yugoslavia.
                    Chance of achieving the good life:
                   bivariate correlation with income and
                 and number of consumer goods, 1978, 1994
                            (1)  (2)         (3)  (4)
                            1978             1994
                            Mean Correlation Mean Correlation
                                 coefficient      coefficient
A. Number of consumer goods
   1. Desired               4.2  -.10 [*]    5.4   .01
   2. Have                  2.4   .19 [*]    2.9   .27 [*]
   3. Shortfall, (1)-(2)    1.8  -.30 [*]    2.5  -.25 [*]
B. Log income                --   .21 [*]     --   .30 [*]
(*.)Significant at .0001 level.
Note: Number of cases for correlations in
panel A: 1894 in 1978, 1933 in 1994;
panel B: 1579 in 1978, 1528 in 1994.
          Number of consumer goods desired: bivariate correlation
             with education and income, by age, 1978 and 1994
Correlate                   Age
                            18-29 30-44   45-59    60+
Education (years completed)
  1978                      -.01  .03     -.06     .14 [*]
  1994                       .02  .05      .07     .04
Log income
  1978                      -.01  .05      .05     .27 [*]
  1994                       .02  .08 [*]  .14 [*] .24 [*]
(*.)Significance levels are approximately as follows:
.08 correlation is significant at .10 level; .12
at .01 level; .15 at .001 level; .20 at .0001 level.
                     Goods aspirations of high school
                   seniors, by plans to attend four year
                      college, 1976 and 1995 (percent
                  answering extremely or quite important)
                                       1976                   1995
                                       College     No College College
                                       plans       plans      plans
Car                                    76          80         84
House (not apt or condo)               52          53         67
Big yard                               60          58         59
Garden                                 60          58         54
Appliances                             51          51         71
Stereo                                 45          44         50
Stylish clothes                        41          40         47
Two cars                               14          14         34
Recreational vehicle                   15          16         21
Vacation home                          12          11         20
Large car                              14          13         19
New car                                11          11         16
Average difference (percentage points)         \1\                    \3(Number of cases)                      (1408)      (1399)     (1841)
                                       No college
                                       plans
Car                                    81
House (not apt or condo)               63
Big yard                               60
Garden                                 51
Appliances                             64
Stereo                                 52
Stylish clothes                        51
Two cars                               33
Recreational vehicle                   29
Vacation home                          19
Large car                              14
New car                                18
Average difference (percentage points)
(Number of cases)                      (509)
Source: Bachman et al., 1980; Johnsonet al., 1997.
                Mean chance of achieving the good life and
                  mean number of consumer goods desired,
           owned, and shortfall, specified life cycle stage [a]
                                           (1)           (2)         (3)
                                           Start of life End of life Change
                                           cycle stage   cycle stage (2)-(1)
A. Early life cycle
   Mean chance of achieving good life      2.3           2.1         -0.2
   Mean number of consumer goods:
    1. Desired                             4.4           5.6          1.2
    2. Owned                               1.7           3.1          1.4
    3. Shortfall, (1)-(2)                  2.6           2.5         -0.1
B. Mid life cycle
   Mean chance of achieving good life      2.3           2.1         -0.2
   Mean number of consumer goods:
    1. Desired                             4.3           5.4          1.1
    2. Owned                               2.5           3.3          0.7
    3. Shortfall, (1)-(2)                  1.8           2.2          0.4
C. Late life cycle
   Mean chance of achieving good life      2.4           2.4          0
   Mean number of consumer goods:
    1. Desired                             4.3           4.9          0.6
    2. Owned                               3.0           3.2          0.2
    3. Shortfall, (1)-(2)                  1.3           1.8          0.5
D. Addendum: Shortfall, based on desires a
   start of specified life cycle stage
    1. Early life cycle                    2.6           1.2         -1.4
    2. Mid life cycle                      1.8           1.0         -0.8
    3. Late life cycle                     1.3           1.0         -0.3
Note: Because of rounding, detail may not add to total.
(a.)For life cycle stages, see Table 4, note a.
                     Mean happiness and mean chance of
                    achieving the good life, specified
                     life cycle stage, [a] by years of
                             school completed
                                          (1)              (2) (3)
                                          Early life cycle     Mid life cycle
                                          Start            End Start
A. Mean happiness
   1. Schooling greater than 12 years     2.7              2.4 2.7
   2. Schooling 12 years or less          2.3              2.2 2.5
   3. Difference, (1)-(2)                 0.4              0.2 0.2
B. Mean chance of achieving the good life
   1. Schooling greater than 12 years     2.5              2.3 2.5
   2. Schooling 12 years or less          2.3              1.9 2.1
   3. Difference, (1)-(2)                 0.2              0.4 0.4
                                          (4) (5)             (6)
                                              Late life cycle
                                          End Start           End
A. Mean happiness
   1. Schooling greater than 12 years     2.5 2.5             2.5
   2. Schooling 12 years or less          2.2 2.5             2.3
   3. Difference, (1)-(2)                 0.3 0.0             0.2
B. Mean chance of achieving the good life
   1. Schooling greater than 12 years     2.3 2.7             2.8
   2. Schooling 12 years or less          1.9 2.2             2.2
   3. Difference, (1)-(2)                 0.4 0.5             0.6
(a.)For life cycle stages, see Table 4, note a.
                  Mean number of consumer goods desired,
                   owned, and shortfall, specified life
               cycle stage, [a] by years of school completed
                                         (1)              (2)  (3)
                                         Early life cycle      Mid life cycle
                                         Start            End  Start
A. Mean number of consumer goods desired
   1. Schooling greater than 12 years     4.3              5.7  4.4
   2. Schooling 12 years or less          4.4              5.4  4.3
   3. Difference, (1)-(2)                -0.1              0.3  0.1
B. Mean number of consumer goods owned
   1. Schooling greater than 12 years     1.8              3.4  2.8
   2. Schooling 12 years or less          1.7              2.8  2.3
   3. Difference, (1)-(2)                 0.1              0.6  0.5
C. Shortfall of consumer goods desired
   1. Schooling greater than 12 years     2.5              2.3  1.6
   2. Schooling 12 years or less          2.7              2.6  1.9
   3. Difference, (1)-(2)                -0.2             -0.3 -0.3
D. Shortfall, based on desires at start
    of life cycle stage
   1. Schooling greater than 12 years     2.5              0.9  1.6
   2. Schooling 12 years or less          2.7              1.6  1.9
                                         (4)  (5)             (6)
                                              Late life cycle
                                         End  Start           End
A. Mean number of consumer goods desired
   1. Schooling greater than 12 years     5.7  4.1             5.3
   2. Schooling 12 years or less          5.2  4.5             4.8
   3. Difference, (1)-(2)                 0.5 -0.4             0.5
B. Mean number of consumer goods owned
   1. Schooling greater than 12 years     3.8  3.2             3.6
   2. Schooling 12 years or less          2.7  3.0             3.0
   3. Difference, (1)-(2)                 1.1  0.2             0.6
C. Shortfall of consumer goods desired
   1. Schooling greater than 12 years     1.8  1.0             1.7
   2. Schooling 12 years or less          2.5  1.5             1.8
   3. Difference, (1)-(2)                -0.7 -0.5            -0.1
D. Shortfall, based on desires at start
    of life cycle stage
   1. Schooling greater than 12 years     0.6  1.0             0.5
   2. Schooling 12 years or less          1.6  1.5             1.5
Note: Because of rounding, details may not add to total.
(a.)For life cycle stages, see Table 4, note a.
                   Bivariate correlation between income
                   and number of consumer goods desired
                         various life cycle stages
                 Correlation at
                     Start      End
Early life cycle     -.01       .08 [*]
Mid life cycle        .05       .14 [*]
Late life cycle       .05       .24 [*]
(*.)For significance levels, see Table 7.
               Change in number of consumer goods owned and
               number of conusmer goods desired, by years of
                school completed, various life cycle stages
Life cycle stage                   Change in number of
                                   consumer goods
                                   Owned               Desired
A. Early life cycle
   Schooling greater than 12 years 1.6                 1.4
   Schooling 12 years or less      1.1                 1.0
   Difference, (1)-(2)             0.5                 0.4
B. Mid life cycle
   Schooling greater than 12 years 1.0                 1.3
   Schooling 12 years or less      0.4                 0.9
   Difference, (1)-(2)             0.6                 0.4
C. Late life cycle
   Schooling greater than 12 years 0.4                 1.2
   Schooling 12 years or less      0.0                 0.3
   Difference, (l)-(2)             0.4                 0.9
Source: Table 11.


Appendix

Good Life Questions from Roper Survey

77. We often hear people talk about what they want out of life. Here are a number of different things. (HAND RESPONDENT CARD) When you think of the good life--the life you'd like to have, which of the things on this list, if any, are part of that good life as far as you personally are concerned?

78. Now would you go down that list and call off all the things you now have? Just call off the letter of the items. (RECORD BELOW)
                                       77.      78.
                                       PART OF  NOW
                                       THE GOOD HAVE
                                       LIFE
a. A home you own                      1        1
b. A yard and lawn                     2        2
c. A car                               3        3
d. A second car                        4        4
e. A vacation home                     5        5
f. A swimming pool                     6        6
g. A happy marrige                     7        7
h. No children                         8        8
i. One child                           9        9
j. Two children                        0        0
k. Three children                      X        X
l. Four or more children               Y        Y
m. A job that pays much more than
   average                             1        1
n. A job that is interesting           2        2
o. A job that contributes to the
   welfare of society                  3        3
p. A college education for myself      4        4
q. A college education for my children 5        5
r. Travel abroad                       6        6
s. A color TV set                      7        7
t. A second color TV set               8        8
u. A five day work week                9        9
v. A four day work week                0        0
w. Really nice clothes                 X        X
x. A lot of money                      Y        Y


79. Thinking of your concept of the good life, how good do you think your chances are of achieving it--very good, fairly good, not very good, or not good at all?
Very good                  1
Fairly good                2
Not very good              3
Not good at all            4
Already achieved it (vol.) 5
Don't know                 Y
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Date:Jan 1, 2001
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