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| Tekijä: | Shmanske, S. |
| Otsikko: | Life-cycle happiness in a discounted utility model |
| Lehti: | Kyklos
1997 : VOL. 50:3, p. 383-407 |
| Asiasana: | UTILITY ASSESSMENT LIFE CYCLES CONSUMPTION LEISURE SIMULATION |
| Kieli: | eng |
| Tiivistelmä: | A discrete time, discounted utility model with a finite horizon is analyzed. Utility is separable and additive in the natural logarithms of the choice variables, consumption and leisure, and an exogenous "memory" series. Happiness is defined as the discounted value of the utility over the remaining lifespan. Simulations of the model show how happiness grows as the high consumption years get closer, peaks, then declines in later life as the remaining lifespan shortens, even though year by year utility may continue to rise. Simulations also show how the peak year for happiness depends on the subjective, personal discount rate, the rate of wage growth, the effect of a liquidity constraint, the effect of memories, and other parametres in the model. The model also illustrates those aspects of the life cycle characterized by the "slackers", the "mid-life crisis", etc. |
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