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Increasing demands in schools, higher pressure on children’s performance levels, and increasing mental health constraints raise questions about the impact of educational achievement on children’s life satisfaction. Therefore, this study investigates whether children’s academic competence levels and school grades affect their life satisfaction and if the effects vary by educational track. Complementing prior research, this study firstly uses fixed effects regressions to get closer to the estimation of the causal link between children’s academic competencies, school grades, and life satisfaction by eliminating time-constant confounding factors such as intelligence, early background characteristics, and genetic factors. By using valuable longitudinal data on academic competencies, school grades, and life satisfaction of children from a sample of 5th-grade students ( N  = 3045) of the National Educational Panel Study in Germany (NEPS) from 2010 to 2015 this study reaches also a broader external validity than prior research. Including various tracks, makes testing for heterogeneous effects by school track attended possible. Results indicate that, on average, children’s school grades seem to be highly important for their life evaluations. Moreover, the effect of school grades does not vary across educational tracks, i.e. school grades seem to matter for all children. In contrast, levels of academic competencies seem to be relevant only for specific subgroups. Investigating effect heterogeneities reveals that only among children in the lower secondary school tracks higher competencies are related to lower life satisfaction. Overall, the study highlights the importance of school grades and point out variation in the relevance of competence levels between school tracks.

The Impact of Children’s Academic Competencies and School Grades on their Life Satisfaction: What Really Matters?