New Economics Papers
on Economics of Happiness
Issue of 2008‒02‒02
sixteen papers chosen by

  1. Happiness and time allocation By Baucells, Manel; Sarin, Rakesh K.
  2. Welfare Reforms and Child Well-Being in the US and UK By Jane Waldfogel
  3. Awards - A View from Psychological Economics By Bruno S. Frey; Susanne Neckermann
  4. Income Distribution and Inequality By Frank A Cowell
  5. Freedom to be a Child: Commercial Pressures on Children By David Piachaud
  6. Inequality Measurement forOrdered Response Health Data By Ramses H. Abul Naga; Tarik Yalcin
  7. Developing and Testing a Measure for the Ethical Culture of Organizations: The Corporate Ethical Virtues Model By Kaptein, M.
  8. Determinants of economic growth - will data tell? By Antonio Ciccone; Marek Jarocinski
  9. Creating Successful collaborative relationships By E. VANPOUCKE; A. VEREECKE
  10. Human Capital Depreciation during Family-related Career Interruptions in Male and Female Occupations By Görlich Dennis; Grip Andries de
  11. Does work impede child's learning? The case of Senegal By Christelle Dumas
  12. Measuring the performance of Italian regions: on social and economic dimensions By Cuffaro, Miranda; Cracolici, Maria Francesca; Nijkamp, Peter
  13. On the welfarist rationale for relative poverty lines By Ravallion, Martin
  14. Projecting the Medium-Term: Outcomes and Errors for GDP Growth By Kappler, Marcus
  15. Determinants of Child Care Participation By Coneus, Katja; Goeggel, Kathrin; Muehler, Grit
  16. measures of social capital and trust By o'higgins, s. niall; Sbriglia, Patrizia

  1. By: Baucells, Manel (IESE Business School); Sarin, Rakesh K. (UCLA Anderson School of Management)
    Abstract: We consider a resource allocation problem in which time is the principal resource. Utility is derived from time-consuming leisure activities, as well as from consumption. To acquire consumption, time needs to be allocated to income generating activities (i.e., work). Leisure (e.g., social relationships, family and rest) is considered a basic good, and its utility is evaluated using the Discounted Utility Model. Consumption is adaptive and its utility is evaluated using a reference-dependent model. Key empirical findings in the happiness literature can be explained by our time allocation model. Further, we examine the impact of projection bias on time allocation between work and leisure. Projection bias causes individuals to overrate the utility derived from income; consequently, individuals may allocate more than the optimal time to work. This misallocation may produce a scenario in which a higher wage rate results in a lower total utility.
    Keywords: Life satisfaction; Work; Leisure; Social comparison; Adaptation;
    Date: 2007–09–09
  2. By: Jane Waldfogel
    Abstract: This paper examines the effects of recent welfare reforms in the US and UK on the well-being of children in low-income families, looking specifically at the effects on poverty, family expenditures, and child health and development. The paper finds some commonalities but also some notable differences. Common to both countries is a sizable reduction in child poverty, although the reduction in child poverty in the US has been less, and some families appear to have been left behind. Expenditure data also point to divergence across the two countries. In the UK, low-income families affected by the reforms are spending more money on items related to children and are more likely to own a car and a phone, while in the US, families affected by welfare reforms are primarily spending more money on items related to employment but not items for children. Finally, a common finding across countries is a relative dearth of more direct evidence on the well-being of children, and specifically how the reforms have affected child health and development. Identifying such effects remains an important topic for further research.
    Keywords: welfare, poverty, expenditures, child well-being
    JEL: I3 J1
    Date: 2007–07
  3. By: Bruno S. Frey; Susanne Neckermann
    Abstract: Awards in the form of orders, decorations, prizes, and titles are ubiquitous in monarchies and republics, private organizations, not-for-profit, and profit-oriented firms. This paper argues that awards present a unique combination of different stimuli and that they are distinct and unlike other monetary and non-monetary rewards. Despite their relevance in all areas of life awards have not received much scientific attention. We propose to study awards and present results on a vignette experiment that quantifies and isolates the effects of different award characteristics such as the publicity associated with winning an award. Further, employing a unique data set, we demonstrate that there are substantial differences in the intensity of usage of awards across countries.
    Keywords: Awards; compensation; incentives; principal-agent; honors and distinctions
    JEL: C93 J33 M52
    Date: 2008–01
  4. By: Frank A Cowell
    Abstract: What are the principal issues on which research on income distributionand inequality focus? How might that focus shift in the immediate future?Prepared for the The Elgar Handbook of Socio-Economics.
    JEL: C13 D63
    Date: 2007–10
  5. By: David Piachaud
    Abstract: Children's lives have been transformed over the past century. Family incomes have increased, children lead more solitary lives, attitudes to childhood have changed, new products have been developed and commercial pressures on children have increased. The importance of these commercial pressures is analysed. Do children understand advertising? How is child poverty affected? How does increased materialism affect psychological well-being? The issues raised for public policy are discussed in terms of children's freedom, the rights of children and the protection of children. Finally, the future of childhood is considered and choices between constraining commercial pressures or not are considered.
    Keywords: childhood, consumption, advertising, commercialization
    JEL: I31
    Date: 2007–07
  6. By: Ramses H. Abul Naga; Tarik Yalcin
    Abstract: When health status is an ordered response variable, Allison and Foster (2004)postulate that a distribution Q ?exhibits more inequality than a distribution P ?if Q ?isobtained from P ?via a sequence of median preserving spreads. This paper introduces aparametric family of inequality indices which are founded on the Allison and Fosterordering.
    Keywords: Self-reported health status, inequality orderings, inequalitymeasures.
    Date: 2007–06
  7. By: Kaptein, M. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Based on four interlocking empirical studies, this paper initially validates and refines the Corporate Ethical Virtues Model which formulates normative criteria for the ethical culture of organizations. The findings of an exploratory factor analysis provide support for the existence of eight unidimensional subscales: clarity, congruency of supervisors, congruency of management, feasibility, supportability, transparency, discussability, and sanctionability. The findings of a confirmatory factor analysis show that the overall fit of the model is quite high. Evidence of convergent and discriminant validity is also found. The resulting 58-item self-reporting questionnaire is a useful tool that can be used in future research and by managers in assessing the ethical culture of their organization.
    Keywords: ethics;culture;virtues;construct development;factor analysis
    Date: 2007–12–07
  8. By: Antonio Ciccone (ICREA-Universitat Pompeu Fabra, Plaça de la Mercè, 10-12. 08002 Barcelona, Spain.); Marek Jarocinski (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.)
    Abstract: Many factors inhibiting and facilitating economic growth have been suggested. Will international income data tell which matter when all are treated symmetrically a priori? We find that growth determinants emerging from agnostic Bayesian model averaging and classical model selection procedures are sensitive to income differences across datasets. For example, many of the 1975-1996 growth determinants according to World Bank income data turn out to be irrelevant when using Penn World Table data instead (the WB adjusts for purchasing power using a slightly different methodology). And each revision of the 1960-1996 PWT income data brings substantial changes regarding growth determinants. We show that research based on stronger priors about potential growth determinants is more robust to imperfect international income data. JEL Classification: E01, O47.
    Keywords: Growth regressions, robust growth determinants.
    Date: 2008–01
    Abstract: Stevens (1989) was among the first to stress the strategic importance of collaboration in the supply chain. On the other hand, some recent studies point out that supply chain collaboration is no guarantee for success (Van Wassenhove et al, 2003; Vereecke et al, 2004; Holweg et al, 2005) and that there is a need to investigate what makes a collaborative relationship successful. Building on the work of Mohr and Spekman (1994), Monczka (1998) and Solis (2004) and several other researchers (Bowersox (2000), Mentzer (2000), etc), we have identified three key antecedents of supply chain collaboration: collaboration attributes, systems & processes and conflict resolution techniques. To measure these antecedents and the link between the antecedents and the performance improvement of the relationship, we developed a survey to measure the least successful and the most successful strategic supplier-and customer-relationships. Based on a cluster analysis on the operational benefits of collaboration, we identified 4 types of collaborative relationships: stagnant, internally-focused, externally-focused and best-in-class collaborative relationships. We found that the characteristics of the relationships are different according to the type of collaborative relationship. Based on the differences in the antecedents of these clusters, we identified different paths to improve supply chain collaboration and we identified 4 types of capabilities to improve the performance of a relationship: cumulative, internal, external and progressive capabilities. This categorization helps management to highlight which aspects of the relationship require more attention, depending on the kind of benefits one wants to accomplish through the relationship.
    Date: 2007–11
  10. By: Görlich Dennis; Grip Andries de (ROA rm)
    Abstract: Human Capital Depreciation during Family-related Career Inter¬ruptions in Male and Female Occupations This study investigates the relation between human capital depreciation during family-related career interruptions and occupational choice of women in the (West) German labour market. In contrast to other studies that do not explicitly focus on family-related career interruptions, we find that short-term human capital depreciation during these career interruptions is significantly lower in female occupations than in male occupations. This holds for both high- and low-skilled occupations. Our findings support the self-selection hypothesis with respect to occupational sex segregation, i.e. women might deliberately choose female occupations because of lower short-term wage penalties for family-related career interruptions. Moreover, we find that particularly men employed in high-skilled male occupations face large short-run as well as long run wage penalties when they have a family related career break.
    Keywords: education, training and the labour market;
    Date: 2007
  11. By: Christelle Dumas (University Cergy-Pontoise-Thema. 33, bd du Port. 95011 Cergy-Pontoise. France.)
    Abstract: This paper assesses the impact of labor performed during childhood on cognitive achievement of teenagers, measured by tests. Introduction of community fixed effects and use of multiple tests taken at the entry of primary school allows to control for unobserved heterogeneity and mea- surement error in the entry tests. We find no detrimental impact of par- ticipation of children to economic activities on their subsequent learning once controlling for the number of years of education but rather a pos- itive, though small, impact. This could come from increased monetary resources. Working more than 4 hours a week or as an employee though prevents the child to learn as much as the other children.
    Keywords: Child labor, Human capital, multiple-indicator, fixed effects.
    JEL: I21 J24
    Date: 2008
  12. By: Cuffaro, Miranda (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Cracolici, Maria Francesca; Nijkamp, Peter
    Abstract: This paper presents a new analytical framework for assessing spatial disparities among regions. On the premise that the analysis of a region’s performance cannot be limited solely to either economic or social aspects, the paper attempts to combine the material (i.e. economic) and immaterial (i.e. social) aspects of welfare and well-being in an integrated logical scheme. In this scheme the economic aspects of living standards are represented by various categories of consumption expenditure, whilst the social aspects are represented by appropriate indicators of health, education, labour market conditions, etc. The framework proposed is also appealing for convergence analyses over time. From a time perspective, introducing this joint socio-economic concept into the analysis of differences among countries allows one to disentangle the notion of convergence into its economic and social dimensions. An empirical analysis is conducted on the Italian regions for the period from 1980 to 2005. The empirical results obtained by Principal Component Analysis show that, on average, a high level of economic welfare may contrast with a high level of social well-being.
    Keywords: Socio-economic Well-being; Living standards; Consumption
    JEL: P46
    Date: 2007
  13. By: Ravallion, Martin
    Abstract: The theory and evidence supporting a relativist approach to poverty measurement are critically reviewed. Various sources of welfare interdependence are identified, including the idea of " relative deprivation " as well other (positive and negative) welfare effects for poor people of belonging to a better-off group. An economic model combines informal risk sharing with the idea of a " positio nal good, " and conditions are derived in which the relative deprivation effect dominates, implying a relative poverty measure. The paper then reviews the problems encountered in testing for welfare effects of relative deprivation and discusses the implications of micro evidence from Malawi. The results are consistent with the emphasis given to absolute level of living in development policy discussions. However, relative deprivation is still evident in the data from this poor but unequal country, and it is likely to become a more important factor as the country develops.
    Keywords: Rural Poverty Reduction,Economic Theory & Research,Inequality,Population Policies
    Date: 2008–01–01
  14. By: Kappler, Marcus
    Abstract: The focus of this paper is the evaluation of a very popular method for potential output estimation and medium-term forecasting— the production function approach—in terms of predictive performance. For this purpose, a forecast evaluation for the three to five years ahead predictions of GDP growth for the individual G7 countries is conducted. To carry out the forecast performance check a particular testing framework is derived that allows the computation of robust test statistics given the specific nature of the generated out-of sample forecasts. In addition, medium-term GDP projections from national and international institutions are examined and it is assessed whether these projections convey a reliable view about future economic developments and whether there is scope for improving their predictive content.
    Keywords: Potential output, projections, forecast evaluation
    JEL: C53 E23 E27
    Date: 2007
  15. By: Coneus, Katja; Goeggel, Kathrin; Muehler, Grit
    Abstract: When estimating the determinants of child care participation, the simultaneity in mothers' decision to work and in the decision to use child care is a major challenge. In this study, we provide evidence on the determinants of institutional child care use accounting for the endogeneity of mothers' labor supply by applying an instrumental variables approach. This endogeneity has been neglected in studies on this issue so far, even though the decision to use child care outside the home is strongly connected to mothers' decision to work after childbirth and vice versa. Based on the German Socio-economic Panel (GSOEP) from 1989{2006 we show that children living in Western Germany have a higher probability to attend institutional care if their mothers increase their actual weekly working time. Estimating the determining factors of child care participation without correcting for simultaneity underestimates the influence of maternal working time by more than a half.
    Keywords: child care choice, kindergarten attendance, maternal employment
    JEL: I21 J13 J22
    Date: 2007
  16. By: o'higgins, s. niall; Sbriglia, Patrizia
    Abstract: Trust and trustworthiness are important components of social capital and much attention has been devoted to the problems of their correct evaluation. Attitudinal survey questions as reported in the EVS – European Value Survey - are often regarded as inefficient indicators of trust, since they lack of behavioural underpinnings (Putnam, 1995) which one might desire when measuring trust. In this paper, we consider alternative measures of trust and trustworthiness, based on behavioural assumptions. We construct two relative behavioural measures of trust (RBM1 and RBM2), both based on the ex post measurement of trust, once individuals are informed on the level of trustworthiness of the social group to which they have been allocated during the experiment. Our main finding is that the relative behavioural measures show that trust strongly varies once the individual is informed on the on the level of trustworthiness of the social group to which he\she has been allocated during the experiment. This difference is higher the higher is the family level of income and the parental education status. As for previous findings (Glaeser et al., 2000, Lazzarini, 2005) which have found no correlation between attitudinal and behavioural measures of trust, we find that relative behavioural measures are not correlated to attitudinal measures but they are strongly correlated to groups’ trustworthiness. We also find that similar social preferences profiles (between Senders and Recipients) tend to enhance the individual level of trust, in the RBM2 context. This result seems to confirm the importance of the homogeneity of the social environment when studying the effects of policy interventions (Alesina and La Ferrara, 2002).
    Keywords: social capital; trust; experiments
    JEL: A10
    Date: 2007–08

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