The relationship between age, socioeconomic factors, and happiness


Age has a significant correlation with happiness, mainly through socioeconomic factors influencing subjective well-being. This has far-reaching policy implication.

In terms of biological factors, Lin (2015) mentions findings from neuroscience that the ability for positive affection with increased age is explainable by changes in brain structure and function. However, this can be offset by psycho-social factors as follows.

Psychologically, people getting older realize the diminishing time left and therefore increasingly value and seek positive emotions that are conducive for well-being; this phenomenon is called socioemotional selectivity theory (Lin, 2015). However, midlife seems to be a peak stress period of time that is causing a dip in happiness around age 40/50.

From a socioeconomic perspective, Lin (2015) concludes that unemployment has the most negative effect on well-being for male around age 40. A contributing stress-factor can be due to the labor market situation for mid-career. Interestingly, employment was negatively correlated to happiness in richer countries (Yeniaras, 2016), highlighting the need for assessing the economic relevance of the individual employment situation. For example, self-employment may be a positively perceived situation too. Another observation by FitzRoy (2014) that income comparison has a so called ‘tunnel effect’, means that younger people may regard a higher peer-group income as a positive own prospect, while older people may perceive an income difference to their peers as an unchangeable negative situation.

Aging societies and policy implications

There is increasing evidence for more and more aspects specifically related to different life stages, especially of socioeconomic nature, which should inform policy making. Economic policies should also address the fact that economic growth in terms of GDP does not ensure increase in well-being in mature economies; this is especially relevant in combination with the aging societies in such countries. Although nations recognize the importance of actively managing happiness of its citizens, it represents a challenge to directly support happiness of elderly for example with pension plans, health care support, and other services helping sustained quality of life.



FitzRoy, F. R., Nolan, M. A., Steinhardt, M. F., & Ulph, D. (2014). Testing the Tunnel Effect: Comparison, Age and Happiness in UK and German Panels. IZA Journal Of European Labor Studies, 3doi:

Lin, Y., Hwang, R., & Deng, W. (2015). Heterogeneity in the Relationship between Subjective Well-Being and Its Determinants over the Life Cycle: A Varying-Coefficient Ordered Probit Approach. Economic Modelling, 49372-386. doi:

Yeniaras, V., Akkemik, K. A., & Yucel, E. (2016). Re-considering the Linkage between the Antecedents and Consequences of Happiness. Journal Of Economic Psychology, 56176-191. doi: