Retirement, Personality, and Well‐being

Abstract

This study investigates how two sources of individual heterogeneity-personality and gender-impact the well-being effects of retirement. Using data on older men and women from the British Household Panel Survey and its continuation, Understanding Society, we estimate the causal effect of retirement on satisfaction with overall life and domains of life in the presence of personality characteristics. As retirement is often considered to be a choice and thus may be endogenous to individual-level characteristics, we use the eligibility ages for basic state pension in the United Kingdom as instruments for retirement. We find that retirement increases leisure satisfaction of both males and females but not necessarily life satisfaction and income satisfaction. We further show that certain personality characteristics affect the well-being of female retirees. For males, however, personality does not seem to matter in how they cope with retirement. (JEL I31, J26, A12, C23)

Government Transfers, Work, and Wellbeing: Evidence from the Russian Old-Age Pension

“…Also using German data, Bonsang and Klein (2012) show that life-satisfaction gains from increased leisure are fully offset when retirement is involuntary. Kesavayuth et al (2016) find that retirement at state pension eligibility age may not increase wellbeing among British workers.…”

Happy People Are Less Likely to Be Unemployed: Psychological Evidence From Panel Data

“…More specifically, personality is one of the strongest predictors of well‐being (Diener and Lucas ), and within‐person changes in personality relate to within‐person changes in life satisfaction (Boyce, Wood, and Powdthavee ). Personality further determines how people's well‐being responds to various life events, including retirement (Kesavayuth, Rosenman, and Zikos ), income changes (Boyce and Wood ), and unemployment (Boyce, Wood, and Brown ). It has also been shown that personality has predictive power in relation to different labor market outcomes.…”

Personality and economic choices

“…The importance of personality for a range of life outcomes is now well established (Borghans et al, 2008;Ozer and Benet-Martínez, 2006). Personality has been shown to help explain a number of important behaviours and outcomes, including wage bargaining (Mueller and Plug, 2006;Nyhus and Pons, 2005), occupational success (Judge and Ilies, 2002), unemployment duration (Egan et al, forthcoming;Fletcher, 2013;Uysal and Pohlmeier, 2011), and well-being reactions to socioeconomic events such as unemployment (Boyce et al, 2010), retirement (Kesavayuth et al, 2016), marriage (Boyce et al, 2016a), and disability (Boyce and Wood, 2011b). This body of research has led to a number of economists arguing that personality research needs to be integrated both theoretically and empirically into economic research (Borghans et al, 2008;Rustichini et al, 2012).…”