Subjective Well-Being: Revisions to Dynamic Equilibrium Theory using National Panel Data and Panel Regression Methods

This paper partly revises the dynamic equilibrium (DE) theory of subjective well-being (SWB), sometimes termed set point theory. Results from four national panel surveys show that correlations among measures of SWB diminish over time, and that the SWB set points of a minority of individuals substantially change. These results mean that DE theory requires revision to make it more dynamic and enable it to better account for medium term change in SWB. The paper identifies personality traits and life events associated with subsequent changes in SWB. Data come from German, British and Australian panel surveys in which SWB has been measured for between 9 and 20 years. Panel regression random and fixed effects models were used to analyse the data.