The paper explores the relationship between subjective well-being (SWB) and various life domains such as health, financial situation, job, leisure, housing, and environment. It proposes a two-layer model where total SWB depends on domain-specific satisfactions. The model distinguishes between long-term and short-term effects and uses a large German panel data set to estimate the relationships. The study finds that domain satisfactions are influenced by objectively measurable variables like income, and that general satisfaction is an aggregate of these domain satisfactions. The paper uses a panel data set from the German Socio-Economic Panel (GSOEP) covering 1992-1997. It includes over 14,000 Western and 6,000 Eastern individuals. The study analyzes satisfaction with various domains and finds that general satisfaction is influenced by factors such as age, income, education, and household composition. The results show that financial, job, and health satisfaction are the most important determinants of general satisfaction, with health having a stronger short-term effect and financial factors being more important in the long term. The paper also discusses the estimation method, using ordered probit models and including individual and time fixed effects. It addresses the issue of unobservable variables and uses a latent component to account for them. The study concludes that subjective well-being can be measured and that self-reported satisfaction is a useful tool for evaluating socio-economic policy. The findings suggest that individual well-being is a composite of various domain satisfactions and that there are significant differences between Western and Eastern respondents. The study also highlights the importance of considering both permanent and transitory effects of variables like income on satisfaction. The results provide insights into the factors that influence individual well-being and the trade-offs between different aspects of life.The paper explores the relationship between subjective well-being (SWB) and various life domains such as health, financial situation, job, leisure, housing, and environment. It proposes a two-layer model where total SWB depends on domain-specific satisfactions. The model distinguishes between long-term and short-term effects and uses a large German panel data set to estimate the relationships. The study finds that domain satisfactions are influenced by objectively measurable variables like income, and that general satisfaction is an aggregate of these domain satisfactions. The paper uses a panel data set from the German Socio-Economic Panel (GSOEP) covering 1992-1997. It includes over 14,000 Western and 6,000 Eastern individuals. The study analyzes satisfaction with various domains and finds that general satisfaction is influenced by factors such as age, income, education, and household composition. The results show that financial, job, and health satisfaction are the most important determinants of general satisfaction, with health having a stronger short-term effect and financial factors being more important in the long term. The paper also discusses the estimation method, using ordered probit models and including individual and time fixed effects. It addresses the issue of unobservable variables and uses a latent component to account for them. The study concludes that subjective well-being can be measured and that self-reported satisfaction is a useful tool for evaluating socio-economic policy. The findings suggest that individual well-being is a composite of various domain satisfactions and that there are significant differences between Western and Eastern respondents. The study also highlights the importance of considering both permanent and transitory effects of variables like income on satisfaction. The results provide insights into the factors that influence individual well-being and the trade-offs between different aspects of life.