nep-hap New Economics Papers
on Economics of Happiness
Issue of 2007‒07‒13
five papers chosen by
Viviana Di Giovinazzo
University of Milano-Bicocca

  1. Hobbies, Skills and Incentives to Work: The Happy Gardener and the Wealthy Golfer By Sällström, Susanna
  2. The Impact of Population Growth on Economic Growth and Poverty Reduction in Uganda By Stephan Klasen; David Lawson
  3. When money does not buy happiness: the case of “frustrated achievers” By BECCHETTI LEONARDO; ROSSETTI FIAMMETTA
  4. The Impact of Real Estate and Stock Market Fluctuations on Human Well-Being By CASTRIOTA STEFANO
  5. Welfare and growth impacts of innovation policies in a small, open economy. An applied general equilibrium analysis By Brita Bye, Taran Fæhn and Tom-Reiel Heggedal

  1. By: Sällström, Susanna
    Abstract: Two of the earliest inventions of a human capital-intensive technology were for the production of personal internal goods that enabled humans to derive more pleasure out of leisure, namely dance and music. I model the incentives to invent hobbies and to acquire hobby skills, and its implications for the incentives to work and to acquire professional skills. This model explains the economic origins of culture. It was no accident that the intricate steps of tango emerged in the shabby quarters of Buenos Aires, and that the Royal and Ancient Golf Club in St Andrews was the initiative of 22 noble and gentlemen of Fife.
    Keywords: culture; education; hobbies; human capital; leisure; welfare
    JEL: D13 J22 J24
    Date: 2007–07
  2. By: Stephan Klasen (University of Goettingen); David Lawson (University of Manchester)
    Abstract: The paper examines the link between population and per capita economic growth, and poverty, using the interesting case study of Uganda. Although Uganda has recently experienced excellent economic growth and poverty reduction, it currently has one of the highest population growth rates in the world which, due to the inherent demographic momentum, will persist for some time to come. By combining both a macro and microeconometric approach, using panel data, we are able to consider the impact of population growth on per capita economic growth and poverty. We find both theoretical considerations and strong empirical evidence suggest that the currently high population growth puts a considerable break on per capita growth prospects in Uganda. Moreover, it contributes significantly to low achievement in poverty reduction and is associated with households being persistently poor and moving into poverty. This is therefore likely to make substantial improvements in poverty reduction, and per capita growth, very difficult.
    Keywords: Population, poverty, Uganda, household size
    JEL: O15 I32 J13
    Date: 2007–05–25
    Abstract: An increase in real per capita income is generally expected to be associated with nonnegative variation in life satisfaction. The alternative (association with negative changes) is generally defined as “frustrated achievement” (Graham and Pettinato, 2002). We investigate the determinants of “frustrated achievement” in the German socioeconomic panel on more than 60,000 observations collected between 1992 and 2004. We observe, in correspondence of almost one third of yearly increases of (equivalised) real household income, a parallel reduction in self declared life satisfaction. Our econometric findings show that lack of full time job, health deterioration, relative income effects, marital status shocks and reduction of relational life are the main factors associated to this phenomenon.
    Date: 2007–05
    Abstract: Fluctuations of house and stock prices have an important effect on household wealth and, consequently, on household consumption patterns. Unfortunately, the recent literature has analyzed the determinants of human well-being and has shown that the relationship between consumption capabilities and happiness is not necessarily linear. In other words, higher income does not automatically imply higher well-being. In this paper I analyze the effects of real estate and stock market fluctuations on self-reported life-satisfaction levels of around 400,000 Western European citizens from 1975 to 2002. There are three main findings. First, both house and stock price increases have a positive effect on happiness. Second, real estate fluctuations are more important than stock market ones, both in relative and absolute terms. Third, when running regressions by age and income subgroups, the coefficients of the two financial variables are always non-negative. Furthermore, low income people are the most sensitive to both stock and house price increases while no big differences emerge among the reaction of different age cohorts. Thus, there does not seem to be room for social conflicts among age cohorts and income groups.
    Date: 2007–05
  5. By: Brita Bye, Taran Fæhn and Tom-Reiel Heggedal (Statistics Norway)
    Abstract: We explore how innovation incentives in a small, open economy should be designed in order to achieve the highest welfare and growth, by means of a computable general equilibrium model with R&D-driven endogenous technological change embodied in varieties of capital. We study policy alternatives targeted towards R&D, capital varieties formation, and domestic investments in capital varieties. Subsidising domestic investments, thereby excluding stimuli to world market deliveries, generates less R&D, capital formation, economic growth, and welfare, than do the other alternatives, reflecting that the domestic market for capital varieties is limited. Directing support to R&D rather than to capital formation generates stronger economic growth, a higher number of patents and capital varieties, and a higher share of R&D in total production. However, it costs in terms of lower production within each firm, where presence of sunk patent costs and mark-ups result in efficiency losses. The welfare result is, thus, slightly lower.
    Keywords: Applied general equilibrium; Endogenous growth; Research and Development
    JEL: C68 E62 H32 O38 O41
    Date: 2007–07

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