Predicting the Trend of Well-Being in Germany: How Much Do Comparisons, Adaptation and Sociability Matter?

Using longitudinal data from the German Socio-Economic Panel, we estimate the variation of subjective well-being experienced
by Germans over the last two decades testing the role of some of the major correlates of people’s well-being. Our results
suggest that the variation of Germans’ well-being between 1996 and 2007 is well predicted by changes over time of income,
demographics and social capital. The increase in social capital predicts the largest positive change in subjective well-being.
Income growth, also predicts a substantial change in subjective well-being, but it is compensated for about three fourths
by the joint negative predictions due to income comparison and income adaptation. Finally, we find that aging of the population
predicts the largest negative change in subjective well-being. This result appears to hinge on the large loss of satisfaction
experienced by individuals in old age.