Living Conditions of Children and Parental Well-Being : Evidence from German Data on Life Satisfaction

The question that this paper addresses is whether or not parents are altruistic towards their children. A new approach will be introduced, where the life satisfaction data of parents will be regressed onto the living conditions of their children who now live independently. After controlling for unobserved household characteristics, no positive effect of children?s actual household income on parents? satisfaction can be found. However, children?s health and education have a positive impact on parental well-being. Both can be interpreted as an approximation of children?s lifetime incomes. We also regress parental life satisfaction on the predicted life satisfaction of their children. A significant positive effect can be found, which can be interpreted as weak evidence for parental altruism. The paper uses data from the German Socio-Economic Panel Study (SOEP).