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17

Table 4: Average episode satisfaction, net affect, and U-index, by employment group

Life
Satisfaction

Net Affect

U-Index

Episode Satisfaction

Employed

7.115

4.231

0.150

7.234

Saddening effect

---

-0.450

+0.027

-0.259

Time composition
effect

---

+0.459

-0.007

+0.068

Unemployed

4.583

4.240

0.170

7.043

Difference between
employed and
unemployed

-2.532

0.009

-0.020

-0.191

(0.000)

(0.975)

(0.475)

(0.295)

Note: p-values for H0: difference=0 in parentheses.

The impact of the time-composition effect can be illustrated in two ways. First, we
decompose the difference in our three measures of momentary experienced utility between the
employed and the unemployed into the saddening and the time-composition effect by a
thought experiment. We calculate how the average momentary experienced utility of all
employed persons would change if they became unemployed under the assumption that they
experience the average net affects of an unemployed person in all activities, but maintain the
time schedule they had when they were still employed. Since we do not observe experienced
utility ratings for work and work-related activities for the unemployed, we assume that the
employed maintain their original values during these activities. The difference between the
experienced utility before becoming unemployed and its value after this hypothetical drop in
well-being levels corresponds to the
saddening effect; the remaining difference to the actual
experienced utility after becoming unemployed can then be assigned to the time-composition
effect.

This decomposition is reported in the second and third line of Table 4 for all three
measures. The average net affect after assigning the affect levels of the unemployed to the
employed without any adjustments in time use would be 3.78. This is 0.45 points below the
value reported by the employed. This is quite a large drop and illustrates that unemployment
has an effect not only on life satisfaction, but also on a person’s mental well-being in specific
activities. As we have seen in Table 4, however, there is no net affect difference between the
employed and the unemployed if time schedules are adjusted. This means that unemployed



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