nep-hap New Economics Papers
on Economics of Happiness
Issue of 2008‒01‒12
eleven papers chosen by
Viviana Di Giovinazzo
University of Milano-Bicocca

  1. The Set-point Theory of Well-being Needs Replacing : On the Brink of a Scientific Revolution? By Bruce Headey
  2. Job Satisfaction and Quits By Louis Lévy-Garboua; Claude Montmarquette; Véronique Simonnet
  3. The persistence of urban poverty in Ethiopia: A tale of two measurements By Bigsten, Arne; Shimeles, Abebe
  5. Who benefits from a job change: The dwarfs or the giants? By Pavlopoulos, Dimitris; Fouarge, Didier; Muffels, Ruud; Vermunt, Jeroen K.
  6. Choosing to keep up with the Joneses By Barnett, Richard C; Bhattacharya, Joydeep; Bunzel, Helle
  7. Jobless Growth through Creative Destruction: Ireland’s Industrial Development Path 1972–2003 By Qi Li; Patrick Paul Walsh; Ciara Whelan
  8. Reconciling work and family life : the effect of french family policies. By Julie Moschion
  9. Offre de travail des mères françaises : l'effet d'une variation exogène du nombre d'enfants. By Julie Moschion
  10. Does Movie Violence Increase Violent Crime? By Gordon Dahl; Stefano DellaVigna
  11. Does Social Capital Mitigate Precariousness? By Sabatini, Fabio

  1. By: Bruce Headey
    Abstract: Set-point theory has dominated the field of subjective well-being (SWB). It has served as a classic Kuhn research paradigm, being extended and refined for thirty years to take in new results. The central plank of the theory is that adult set-points do not change, except just temporarily in the face of major life events. There was always some 'discordant data', including evidence that some events are so tragic (e.g. the death of one's child) that people never recover back to their set-point. It was possible to dismiss these events as 'exceptions' and maintain the theory. However, several new findings are now emerging, which it is increasingly difficult to dismiss as 'exceptions' and which appear to require substantial revisions or replacement of set-point theory. Many of these findings are based on data from the German Socio-Economic Panel Survey (SOEP, 1984 - ) which provides clear evidence of large, long term changes in the set-points of substantial minorities of the population. This paper reviews recent findings and highlights lines of theory development which, at minimum, represent substantial revisions to set-point theory and which may perhaps lead to replacement of the paradigm. There is evidence to suggest that individuals with certain personality traits are more likely to record long term change in SWB than others. Also, SWB appears to depend partly on choice/prioritisation of some life goals rather than others. Pursuit of non-zero sum goals (family and altruistic goals) leads to higher SWB than pursuit of zero sum goals (career advancement and material gains). Both these new lines of theory appear promising and the second, in particular, cannot sensibly be reconciled with set-point theory.
    Date: 2007
  2. By: Louis Lévy-Garboua (Ecole d'économie de Paris - Paris School of Economics - Université Panthéon-Sorbonne - Paris I, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, CIRANO - Centre interuniversitaire de recherche en analyse des organisations - Université du Québec à Montréal); Claude Montmarquette (CIRANO - Centre interuniversitaire de recherche en analyse des organisations - Université du Québec à Montréal, Université de Montréal - Département de Sciences Economique - Université de Montréal); Véronique Simonnet (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: We test the wealth maximization theory of quitting behavior on the German Socioeconomic Panel (1985-2003). With the interpretation of job satisfaction as an expression of the experienced preference for the present job against available alternatives, the propensity to stay in the present job is simply related to the residual of a job satisfaction equation. We show that this residual is a better predictor of quits than the overall level of satisfaction. Furthermore, we validate a dynamic extension of the economic theory of quits for which uncertainty in the expectation of future events plays a decisive role.
    Keywords: Voluntary quit, job satisfaction, surprises, wealth maximization model
    Date: 2007–04
  3. By: Bigsten, Arne (Department of Economics, School of Business, Economics and Law, Göteborg University); Shimeles, Abebe (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This paper investigates dynamics of poverty in urban Ethiopia using both subjective and objective definitions of poverty. The two sets of estimates of persistence and recurrence of poverty are similar, suggesting that consumption-based mobility estimates are not seriously distorted by measurement error.<p>
    Keywords: Subjective poverty; poverty spells; state dependence
    JEL: I32
    Date: 2008–01–08
  4. By: Fischer, Justina AV (Dept. of Economic Statistics, Stockholm School of Economics); Sousa-Poza, Alfonso (University of Stuttgart-Hohenheim)
    Abstract: This paper evaluates the relationship between job satisfaction and measures of health of workers using the German Socio-Economic Panel (GSOEP). Methodologically, it addresses two important design problems encountered frequently in the literature: (a) cross-sectional causality problems and (b) absence of objective measures of physical health that complement self-reported measures of health status. Not only does using the panel structure with individual fixed effects mitigate the bias from omitting unobservable personal psycho-social characteristics, but employing more objective health measures such as health-system contacts and disability addresses such measurement problems relating to self-report assessments of health status. <p> We find a positive link between job satisfaction (and changes over time therein) and subjective health measures (and changes therein); that is, employees with higher or improved job satisfaction levels feel healthier and are more satisfied with their health. This observation also holds true for more objective measures of health. Particularly, improvements in job satisfaction over time appear to prevent workers from (further) health deterioration.
    Keywords: job satisfaction; well-being; health; panel data analysis
    JEL: I18 I19 J28
    Date: 2007–09–28
  5. By: Pavlopoulos, Dimitris (CEPS/INSTEAD and University of Leuven); Fouarge, Didier (Research Center for Education and the Labour Market (ROA)); Muffels, Ruud (Tilburg University, Department of Sociology); Vermunt, Jeroen K. (Tilburg University, Department of Methodology and Statistics)
    Abstract: Empirical studies have shown that voluntary job-to-job changes have a positive effect on wage mobility. In this paper, we suggest that the impact of a job change on wage growth depends on the position in the wage distribution. Using panel data from the UK and Germany, we investigate the effect of employer changes and within-firm job changes on year-to-year wage mobility. We show that a change of employer results into a wage increase for the low-paid workers but not for the high-paid workers. Within-firm job changes produce, on average, moderate wage gains for the low-paid workers in the UK, but have no effect in Germany. Results on 3-year wage mobility are shown to be very similar to the results on year-to-year wage growth.
    Keywords: low pay; high pay ; job mobility ; wage mobility
    JEL: J31 J62
    Date: 2007–12
  6. By: Barnett, Richard C; Bhattacharya, Joydeep; Bunzel, Helle
    Abstract: Does a rise in income inequality induce people to work harder to stay in the rat race ("keep up with the Joneses") or to simply drop out? We investigate this issue in a simple new framework in which heterogeneous ability agents get extra utility if their consumption keeps up with the economy's average. The novelty is that agents are allowed to choose whether they want to stay in or drop out of the rat race. We show that sufficiently high ability agents choose to keep up with the Joneses and they enjoy higher consumption but lower leisure than those who don't. When income inequality rises in a mean-preserving manner, average leisure in the economy may fall. Our analysis touches on the question, why are Americans working so much compared to the Europeans? We posit that higher income inequality in the US, by inducing more people to join the rat race there, may be partly responsible for the transatlantic leisure divide.
    Keywords: keeping up with the Joneses, consumption externalities, leisure, labor supply
    JEL: E0
    Date: 2008–01–10
  7. By: Qi Li (University College Dublin); Patrick Paul Walsh (University College Dublin and IZA); Ciara Whelan (University College Dublin)
    Abstract: We document the nature of structural changes in employment to understand “jobless” growth in Irish Manufacturing in the aftermath of EEC/EU membership, 1972-2003. By 1972, forty years of protectionism and fifteen years of export promotion induced the coexistence of large exporting plants with import competing plants within 4-digit industries. During trade liberalisation we document persistent horizontal waves of creative destruction, a decline in traditional import competing plants and an expansion in exporting plants, within each sector. This coexisted with rapid vertical waves of creative destruction in small non-exporting plants which supported exporting growth through forward vertical linkages within each sector.
    Keywords: manufacturing employment, structural change, trade liberalisation
    JEL: O30 L20
    Date: 2007–12
  8. By: Julie Moschion (Centre d'Economie de la Sorbonne)
    Abstract: In France, having more than two children has a causal negative impact on mothers' labour supply. The question addressed in this paper is whether some family policies alter this effect. The idea is that by improving the conditions of the conciliation between family life and professional life, family policies could reduce the negative impact of having more than two children on mothers' participation. Conversely, some family policies could increase this effect by inciting mothers to have an entry-exit strategy on the labour market according to the different periods of their lives, rather than to reconcile family and professional ressponsibilities. To address this issue, we focus on two different types of family policy : the paid parental leave and the supply of child care for young kids. To measure the effect of these family policies, we have spotted temporal or spatial changes that modify the conditions in which individual decisions are taken. Firstly, we show that after the July 1994 extension of the Allocation parentale d'éducation to parents of two children (among which one is less than three years old), that is when families of two and more than two children have the same incentive to take a paid parental leave, having more than two children has no longer a negative effect on the participation probability of mothers. In addition, this is particularly true for young women having no more than the school-leaving certificate, which happen to be the main beneficiaires of the benefit. Secondly, using the heterogeneity in the geographical distribution of two-years-old in pre-elementary public schools, we find that supplying mothers of two years old children with developed child care modifies the effect of fertility on mothers' labour supply and seems to help mothers to better conciliate family and professional life but our estimates are less convincing.
    Keywords: Fertility, women's participation in the labour market, family policies.
    JEL: J13 J22
    Date: 2007–12
  9. By: Julie Moschion (Centre d'Economie de la Sorbonne)
    Abstract: Between 1962 and 2005, whereas the activity rate of French men decreased, the activity rate of French women increased from 45,8% to 63,8%. However, women's activity rate remains correlated with the number of children : women with the lowest number of children are also the ones with the highest participation rate in the labour market. To what extent having an additional child reduces the mother's probability to participate in the labour market ? The link between fertility and mothers' participation decisions is complex because they have joint determinants, and influence each other. Hard then to say a priori if the choice of working or not is the cause or the consequence of the decision of having a certain number of children. As Angrist and Evans (1998), we use a source of exogenous and random variation of fertility to measure the causal effect of fertility on French mothers' labour supply. As in the United States, we find that the probability of having a third child is higher among parents with same sex siblings, and that in this case, mothers' participation in the labour market is reduced. Because sex mix is randomly assigned and because it has an effect on participation only through its impact on the probability of having a third child, we produce instrumental variable estimates of the effect of having more than two children on mothers' participation in the labour market. We find that having more than two children reduces significantly the mothers' participation proobability and the hours worked per week. These results are confirmed by the use of twin second birth as the exogenous fertility shock. Also, our results indicate that having more than two children especially affects the labour supply of less graduated mothers but has no effect on fathers' labour supply.
    Keywords: Fertility, mothers' labour supply.
    JEL: J13 J22
    Date: 2007–12
  10. By: Gordon Dahl; Stefano DellaVigna
    Abstract: Laboratory experiments in psychology find that media violence increases aggression in the short run. We analyze whether media violence affects violent crime in the field. We exploit variation in the violence of blockbuster movies from 1995 to 2004, and study the effect on same-day assaults. We find that violent crime decreases on days with larger theater audiences for violent movies. The effect is partly due to voluntary incapacitation: between 6PM and 12AM, a one million increase in the audience for violent movies reduces violent crime by 1.1 to 1.3 percent. After exposure to the movie, between 12AM and 6AM, violent crime is reduced by an even larger percent. This finding is explained by the self-selection of violent individuals into violent movie attendance, leading to a substitution away from more volatile activities. In particular, movie attendance appears to reduce alcohol consumption. Like the laboratory experiments, we find indirect evidence that movie violence increases violent crime; however, this effect is dominated by the reduction in crime induced by a substitution away from more dangerous activities. Overall, our estimates suggest that in the short-run violent movies deter almost 1,000 assaults on an average weekend. While our design does not allow us to estimate long-run effects, we find no evidence of medium-run effects up to three weeks after initial exposure.
    JEL: A12 C91 C93 J08
    Date: 2008–01
  11. By: Sabatini, Fabio
    Abstract: There is a surprising gap in the economic literature on social capital. First, we lack studies addressing the effects of social capital on those facets of development that can contribute in making growth more sustainable in the long run, like, for example, human development and social cohesion. Second, it is still unclear what type of networks may exert a positive effect on the different dimensions of development. In particular, the literature has not yet provided a rigorous assessment of the role of strong family ties, that are generally referred to as a form of bonding social capital causing backwardness. This paper carries out an empirical investigation into the relationship between the three types of social capital so far identified by the literature (i.e. bonding, bridging and linking), human development, and labour precariousness, in the belief that precariousness and uncertainty play a crucial role in determining the social cohesion and well-being that are necessary to make growth sustainable in the long run.
    Keywords: Social capital; Human development; Labour market; Precariousness; Italy
    JEL: O15 J24 Z13
    Date: 2008–01–08

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