What happens when the unemployed retire?

by on March 28, 2014 at 7:31 am in Economics | Permalink

They become much happier, or so it seems in a new paper by hetschko, Knabe, and Schoeb, “Changing Identity: Retiring from Unemployment.”  (Ungated versions here.)

Catherine Rampell reports on the research here.  Part of her summary is this:

The paper is based on German survey data and finds that self-reported “life-satisfaction” increases by around 0.3 points on a scale from 0 to 10 for people who transition from unemployment to retirement. That’s about twice the increase in happiness that newlyweds experience. The average person who transitions from employment to retirement, on the other hand, does not experience a bump in life satisfaction.

And:

Rather ironically, it is hope that keeps people unhappy while unemployed…

prior_approval March 28, 2014 at 8:06 am

Retirement is dignified, unemployment shameful in Germany.

Now illustrated with empirical data.

Just Another MR Commentor March 28, 2014 at 9:32 am

Schönes Wochenende

Just Another MR Commentor March 28, 2014 at 8:26 am

The fact that people have surplus wealth to retire on jus demonstrates that wages are stratospherically high and more H1B visas need to be granted to keep our workforce competitive.. Retirement is basically rentseeking.

Age Of Doubt March 28, 2014 at 7:50 pm

I’d expect their retirement “wealth” is in the form of a pension. Can’t exactly outsource that. But not to worry, retirement is fast becoming a luxury no one can afford.

Beliavsky March 28, 2014 at 8:27 am

I think a 0.3 point increase on a 0-10 happiness scale means “slightly happier”, not “much happier”.

Dan Weber March 28, 2014 at 8:42 am

Depends on the end points.

If 0 is crying in my urine-soaked pants as I’m face-down homeless in the gutter, and 10 is flying a helicopter packed with cocaine sluts underneath the Eiffel tower while shooting mimes with lasers, then 0.3 is a pretty big difference.

Helicopter Pilot March 28, 2014 at 9:42 am

Bravo! Most insightful comment I’ve read on MR!

bob March 28, 2014 at 9:54 am

+1

Thor March 28, 2014 at 7:54 pm

But you would say that, wouldn’t you? You’ve been the helicopter pilot for Dan.

Thelonious_Nick March 28, 2014 at 11:40 am

I used to think that happy people were really not that much happier than sad people, all things considered. I see now how wrong I was.

Edward Burke March 28, 2014 at 8:46 am

Exactly how credible are any metrics pertaining to emotional states? What explanatory power do such data possess, or what explanatory power is imputed to such data? Most people in touch with their affective states are not mathematicians, and many fewer are not synesthetic enough to have strong emotional bonds with numbers or numeric data. We know how clever mathematicians are or can be, but when they assure us they can correlate an affective state with whatever accuracy with a numeric value (even when reported by survey subjects), the pedestrian reader is generally left–cold.

One of the few (and I mean few) numerals qua numerals I have any abiding emotional bond with is the square root of negative one, which in this instance is the value I can cheerfully assign to all efforts to impute numeric values to affective states. (With thanks to Evgeny Zamyatin.)

–or what numeric value might we assign to flattery, whenever we find the earnest statistician coming around seeking data input from citizens? One kick in the pants, one telephone connection disconnected, one door slammed shut might be the kinds of answers that elicit an affective response from the putative statistician.

US March 28, 2014 at 10:45 am

“Exactly how credible are any metrics pertaining to emotional states? What explanatory power do such data possess, or what explanatory power is imputed to such data?”

The psychometrics literature has been dealing with that kind of stuff for over 50 years. Psychology textbooks tend to include coverage of this type of stuff. I’d say psychologists are often somewhat overconfident about which conclusions to draw from the data, but it’s not like they’re not aware of things like these – they’ve struggled with data problems like this for decades. Validating applied metrics in various ways is a big deal in psychology. Some metrics are better than others. Some are quite good. Others are not. I’m not sure what you mean in your last paragraph, but psychologists naturally have been doing work on stuff like social desirability bias (‘people tell researchers what they think the researchers want to hear, instead of the truth’) as well. Some areas and types of data gathering are more sensitive to this than others and researchers know this (or ought to know, if they’ve read the textbooks).

I’m not a psychologist, but I’ve read some of their textbooks out of interest. If you want to know the answers to your questions you should read them too. A lot of work has been done on this kind of stuff.

Edward Burke March 28, 2014 at 11:12 am

The only psychology textbook I ever found any value in was one devoted to abnormal psychology. While I concede that may suggest something about yours truly (by way of mitigation, I never took the course but only examined closely the text used by a close relative), I of course am ready to assert that it tells much more about the pseudo-science that psychology remains to this day.

I’m no psychologist, either, so I recommend Dostoevsky for a credible logos of the psyche. Consult “Notes from Underground”, e.g.

Matt March 28, 2014 at 9:00 am

Rather ironically, it is hope that keeps people unhappy while unemployed

Not ironic or surprising at all- hope comes last out of Pandora’s box not to save us, but because it’s the worst monster of all. As someone or other once said(*), “A man without hope is a man without fear”.

(*)It was Frank Miller, or at least that’s where I read it. Nietzsche says something similar somewhere, but I can never find the line again. If you don’t want to quote a rather dim and probably disturbed person like Frank Miller, you can look up the line from Nietzsche.

A Definite Beta Guy March 28, 2014 at 9:13 am

Hope is the first step on the path to disappointment. Also, comparison is the thief of joy.

chuck martel March 28, 2014 at 10:11 am

Nothing disturbed about Nietzsche.

The Other Jim March 28, 2014 at 10:36 am

Dear God, people. Watch Shawshank Redemption before it’s too late.

Kevin C. March 31, 2014 at 9:12 am

“Hope in reality is the worst of all evils because it prolongs the torments of man.”
–Friedrich Nietzsche, in “Human, All Too Human”

This quote is a personal favorite of mine, and was my first thought too on the end of this post.

mulp March 28, 2014 at 11:47 am

When unemployed, you are constantly trying to convince employers you should be purposely made a drag on their corporate profits and allowed to suck money out of the economy into the blackhole of paid labor making absolutely no positive contribution to society and the economy – workers need to be killed for being such a drain on the economy.

When retired, you are a huge contributor to society and the economy because you consume goods and services creating profits for the machines and robots.

The switch from unemployed to retirement is the switch from not being a consumer and trying to drag down the economy, to being a consumer boosting the growth of the robot and machine economy.

Retirement from work makes you realize how worthless you were as you stop being a drag on the economy and become a consumer contributing positively to society and the economy.

David~ March 28, 2014 at 11:12 pm

Disappointment is a negative emotion. Hope leads to disappointment. Giving up hope leads to less disappointment. Less disappointment = great happiness, life satisfaction, overall subjective sense of well-being.

Marie March 29, 2014 at 9:00 am

I may be reading the graphs wrong.
Let’s say, though, you rate happiness on a 1 to 10 scale.
Employed guy starts at 5 and retires and moves to 6.
Unemployed guy starts at 2 and retires and moves to 5. He sure moved more. But he’s still unhappier.
Obviously it’s going to be relief of kinds to stop being “unemployed” and move on. But that hardly means you’re better off going from unemployed to retired. Seems you’re better off going from unemployed to employed, then retired.

ricardo March 30, 2014 at 9:27 pm

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