The Origins of Happiness

Income

As expected, all the coefficient sizes are reduced, but social

comparisons dominate adaptation in both Britain and Ger-

many (while in Australia both become very small).

What Determines Someone’s Income?

Finally, how are family incomes determined? What aspects

of your earlier life predict your standard of living? To inves-

tigate this, we return to the BCS and estimate an equation

in which the log of equivalized income is regressed on all

three child outcomes as well as family background. Bear

in mind that this is not an individual earnings equation:

equivalized household income also reflects the income of

their partner and the size of their family. And it explains the

resulting income by everything we know about a person’s

childhood and background. The main influences are shown

in Table 2.5.^28

As expected, the dominant influence is the child’s intel-

lectual performance. This is measured simply by whether

the person had or did not have an O- level equivalent (grades

Table 2.4. How life- satisfaction (0– 10) is affected by own income,

comparator income, and own previous income

(household panel data) (fixed effects)

Britain Germany Australia

Log own income 0.06 (.01) 0.19 (.01) 0.06 (.01)

Log comparator
income

−0.09 (.06) −0.12 (.04) 0.01 (.04)

Log previous 3
years’ income

−0.02 (.02) −0.08 (.01) −0.01 (.01)