This chapter is partly based on Van Praag, Frijters, and Ferrer-i-Carbonell (2003).
There is more to life than income. Psychologists distinguish between various domains of life. One may be very happy with one's financial situation but very unhappy with one's job or with the time available for leisure. Individuals are able to distinguish various aspects of life and to evaluate them separately in terms of how satisfied they are with respect to each of these aspects. In the German GSOEP data set 6 separate domains are distinguished, while in the comparable British BHPS data set there are 8 separate domains. The similarities and differences in the domains in these two data sets are listed in Table 3.1 .
The questions in the GSOEP that provide information about the degree of satisfaction with respect to the separate domains have approximately the following general format (while the particular domain varies: e.g. health, job, etc.):
Please answer by using the following scale in which 0 means totally unhappy and 10 means totally happy:
How satisfied are you with…(your health, job, …)
Note that here the respondent is asked to give a numerical evaluation. In older questionnaires we see response categories which are described using verbal labels