New Economics Papers
on Economics of Happiness
Issue of 2007‒11‒17
seven papers chosen by

  1. Keeping Up With the Schmidts: An Empirical Test of Relative Deprivation Theory in the Neighbourhood Context By Gundi Knies; Simon Burgess; Carol Propper
  2. Comparing Subjective and Objective Measures of Health: Evidence from Hypertension for the Income/Health Gradient By David W.Johnston; Carol Propper; Michael A.Shields
  3. Economic Inequality and Health: Looking Beyond Aggregate Indicators By Böckerman, Petri; Johansson, Edvard; Helakorpi, Satu; Uutela, Antti
  4. The empirics of social capital and economic development: A critical perspective By Sabatini Fabio
  5. Welfare Shifts in the Post-Apartheid South Africa: A Comprehensive Measurement of Changes By Haroon Bhorat; Sumayya Goga; Carlene van der Westhuizen
  6. A History of Japan’s Foreign Aid Policy: From Physical Capital to Human Capital By Furuoka, Fumitaka
  7. Poverty, Inequality, and Populist Politics in Iran By Djavad Salehi-Isfahani

  1. By: Gundi Knies; Simon Burgess; Carol Propper
    Abstract: We test empirically whether people’s life satisfaction depends on their relative income position in the neighbourhood, drawing on a unique dataset, the German Socio-economic Panel Study (SOEP) matched with micro-marketing indicators of population characteristics. Relative deprivation theory suggests that individuals are happier the better their relative income position in the neighbourhood is. To test this theory we estimate micro-economic happiness models for the years 1994 and 1999 with controls for own income and for neighbourhood income at the zip-code level (roughly 9,000 people). There exist no negative and no statistically significant associations between neighbourhood income and life satisfaction, which refutes relative deprivation theory. If anything, we find positive associations between neighbourhood income and happiness in all cross-sectional models and this is robust to a number of robustness tests, including adding in more controls for neighbourhood quality, changing the outcome variable, and interacting neighbourhood income with indicators that proxy the extent to which individuals may be assumed to interact with their neighbours. We argue that the scale at which we measure neighbourhood characteristics may be too large still to identify the comparison effect sought after.
    Keywords: Life satisfaction, Neighbourhood effects, Comparison income, Reference group
    JEL: I31 C23 Z1
    Date: 2007–05
  2. By: David W.Johnston; Carol Propper; Michael A.Shields
    Abstract: Economists rely heavily on self-reported measures of health status to examine the relationship between income and health. In this paper we directly compare survey responses to a self-reported measure of health that is commonly available in nationally-representative individual and household surveys, with objective measures of the same health condition. Our particular focus is on hypertension, which is the most prevalent health condition in Western countries. Using data from the Health Survey for England, we find that there is a substantial difference in the percentage of adult survey respondents reporting that they have hypertension as a chronic health condition compared to that from repeated measurements by a trained nurse. Around 85% of individuals measured as having hypertension do not report having it as a chronic illness. Importantly, we find no evidence of an income/health gradient using self-reported hypertension, but a large (about 14 times the size) gradient when using objectively measured hypertension. We also find that the probability of false negative reporting, that is an individual not reporting to have chronic hypertension when in fact they have it, is significantly higher for individuals living in low income households. Given the wide use of such self-reported chronic health conditions in applied research, and the asymptomatic nature of many major illnesses such as hypertension, diabetes, heart disease and cancer at moderate and sometimes very elevated levels, we show that using commonly available self-reported chronic health measures is likely to lead to an underestimate of true income-related inequalities in health. This has important implications for policy advice.
    Keywords: Hypertension, Objective Health, Self-Reported Health, Reporting Error, Income
    JEL: I10 I18 C42
    Date: 2007–03
  3. By: Böckerman, Petri; Johansson, Edvard; Helakorpi, Satu; Uutela, Antti
    Abstract: This paper examines the relationship between relative income inequality and health in Finland, using individual microdata over the period 1993-2005. Our data allows us to analyse a large spectrum of health indicators. Overall, our results suggest that income inequality is not associated with increased morbidity in the population. The results for women differ to quite a large extent from those of men and the pooled sample. There is evidence that an increase in the Gini coefficient is negatively related to the probability of good physical health and no disability retirement. For men, relative income inequality is clearly not important for health.
    Keywords: Health; health behaviour; economic inequality; relative income inequality; relative deprivation; Gini coefficient
    JEL: I00 I32
    Date: 2007–11–07
  4. By: Sabatini Fabio
    Date: 2007–11
  5. By: Haroon Bhorat; Sumayya Goga; Carlene van der Westhuizen (Development Policy Research Unit,University of Cape Town)
    Abstract: Abstract: The objective of this study is to provide a comprehensive measure of shifts in welfare in post-apartheid South Africa by examining changes in both income and non-income welfare between 1993 and 2005. Previous research using expenditure or consumption-based measures of income has shown that, depending on the data sources, household income poverty in South Africa either remained static or increased slightly between 1995 and 2000 or between 1996 and 2001. Research considering the changes in non-income welfare in the post-apartheid South Africa has found significant increases in the levels of non-income welfare, driven to a large extend by the increased delivery of basic services by government since 1994. Using factor analysis, we construct a comprehensive household welfare index that includes public assets (government provided services), private assets (including education) and wage and grant income. In addition, a public asset index and a private asset index are constructed that allow us to analyse welfare as captured by access to government provided services and privately owned assets respectively. Given the availability of data for 1999 we are able to provide mid-period estimates for all three indices. When standard poverty measures are applied to our derived indices, we find that total household welfare increased between 1993 and 2005. We also find that total welfare increased at a faster pace between 1993 and 1999 than between 1999 and 2005. The evidence suggests that in the first period the increase was driven largely by increased government service delivery, while in the second period it was driven by the growth in private asset ownership.
    Keywords: South Africa: welfare shifts, public assets, private assets
    JEL: A1
    Date: 2007–10
  6. By: Furuoka, Fumitaka
    Abstract: This paper critically reviews Japan’s experience from being an aid recipient after the World War Second to becoming a leading donor of Official Development Assistance (ODA) since the 1990s. Of particular significance is the new trend of Japanese aid policy in which Japan stressed the importance of human capital rather than physical capital. Under the new guidelines which were first announced in 1991, Japanese government has paid more attentions to spend their money for human capital investment in developing countries, such as educations, health care, rather than physical investment, such as constructions of dams or highways.
    Keywords: foreign aid; Japan; human capital; history
    JEL: F35
    Date: 2007–11–08
  7. By: Djavad Salehi-Isfahani
    Abstract: Despite nearly three decades of revolutionary government rule, poverty and inequality remain the central issues of political debate in Iran. The unexpected electoral victory of Ahmadinejad, the populist candidate in the 2005 presidential election, has been widely attributed to rising poverty and inequity. Using household survey data, I examine the trends in poverty and inequality for the last three decades and show that this thesis is not grounded in facts. Survey data show that poverty has substantially declined in recent years, and is low by international standards and in comparison with pre-revolution years. This ¯nding is consistent with pro-poor policies of the Islamic government, mainly in provision of basic infrastructure such as electricity, safe drinking water, and health. However, the same policies have not been as elective in reducing in- equality, which, after an initial decline following the Revolution, has remained basically constant in the post-Revolution period.
    Keywords: Poverty, Inequality, and Populist Politics in Iran
    Date: 2007

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