Well-Being in Germany: GDP and Unemployment Still Matter

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Abstract
This paper examines regional differences in subjective well-being (SWB)in Germany. Inferential statistics indicate a diminishing but still signifi-cant gap between East and West Germany, but also differing levels of SWBwithin both parts. The observed regional pattern of life satisfaction reflectsmacroeconomic fundamentals, where labor market conditions play a dom-inant role. Differing levels of GDP and economic growth have contributedrather indirectly to regional well-being such that the years since the Ger-man reunification can be considered as a period of joyless growth. Approx-imately half of the “satisfaction gap” between East and West Germany canbe attributed to differing macroeconomic conditions. Moreover, we arguethat it is advisable for governments to collect more data on aspects thatpresumably influence the well-being of society. For example, it is highlyprobable that reliable data on regional income inequality would lead to sev-eral important and influential studies. This, in turn, can help to designindicators for those characteristics which are known for affecting SWB. Intotal, we do not perceive any fundamental caveat for using data on SWBin order to measure welfare directly, at least within culturally and linguis-tically homogenous regions. To reduce statistical uncertainty, however, itwould be helpful to include subjective information of this kind into largercross-sectional surveys such as common census data.

Keywords: social welfare, subjective well-being, unemployment, economic growth