Endogeneity in the relation between poverty, wealth and life satisfaction

This paper concentrates on the complex interplay between poverty, wealth and life satisfaction. Main areas of life are quantified in a multidimensional approach of poverty and wealth: Individual income, current health, occupational autonomy or employment status and life satisfaction. The analyzed data was taken from the German Socio Economic Panel Study (SOEP) at the German Institute for Economic Research (DIW Berlin), Berlin. A period from 1998-2009 is examined. This study has two main goals: (1) To contribute to the interconnection between poverty, wealth and life satisfaction. (2) The endogeneity research regarding life satisfaction should be expanded. Reduced form vectorautoregressions (with first differences) were used to answer the questions. Therefore, granger-causality can be assumed. Major findings include: an initial rise in life satisfaction can improve income and health, but not job autonomy. However, even the probability of returning from unemployment to employment can increase. Gender-specific differences are discussed. JEL: I19, I31, I32, J64