New Economics Papers
on Economics of Happiness
Issue of 2008‒03‒25
five papers chosen by

  1. Capital Income Flows and the Relative Well-Being of America's Aged Population By Barry P. Bosworth; Gary Burtless; Sarah E. Anders
  2. The capabilities approach By Erik Schokkaert
  3. A Gradual Exit May Not Make for a Happier Retirement By Esteban Calvo; Kelly Haverstick; Steven A. Sass
  4. Productivity effects of innovation, stress and social relations By Weehuizen, Rifka; Sanditov, Bulat; Cowan, Robin
  5. Aspirations, Adaptation and Subjective Well-Being of Rural-Urban Migrants in China By John Knight; Ramani Gunatilaka

  1. By: Barry P. Bosworth (The Brookings Institution); Gary Burtless (The Brookings Institution); Sarah E. Anders (The Brookings Institution)
    Abstract: One way to assess the effectiveness of a nation’s pension system is to measure its success in bringing the incomes of the aged close to those enjoyed by the nonaged. The comparability of income estimates for the aged and nonaged depends, however, on the relative accuracy of the income reports for the two populations. Unfortunately, some income items that are particularly important to the elderly, including occupational pensions, income derived from financial assets, and returns on homeowners’ net equity in their principal residence, are either unreported or significantly underreported in household surveys. In this paper we assess the effects of unmeasured and underreported income flows on the relative incomes of the aged and near-aged. We use survey data from the March Current Population Survey and the Survey of Consumer Finances. The latter survey contains information on wealth holdings as well as income. Using our broadest definition of income, which includes the return on net equity in an owner-occupied home and the predicted annuity flow from a household’s financial assets, the incomes of aged households in the middle of the old-age income distribution appear to be similar to those of nonaged households in the middle of the nonaged income distribution. In the top and bottom one-quarter of the old-age income distribution, incomes under the broadest income definition are substantially higher than those of nonaged households in the equivalent position of the income distribution. This income pattern diverges sharply from the one that would be inferred under the Census Bureau’s standard money income definition, which shows that aged households have noticeably lower incomes than the nonaged.
    Date: 2007–10
  2. By: Erik Schokkaert
    Abstract: Capabilities and functionings are new and attractive concepts for assessing the well-being and advantage of individuals. Functionings refer to a person’s achievements, i.e. what she manages to do or to be. Capabilities refer to her real opportunities and incorporate the idea of freedom. We discuss how recent theoretical and empirical work has improved our insights in some of the key questions of the approach. How to measure opportunities and how to balance freedom and responsibility? How to formulate a list of capabilities which can be used to analyse changes over time and differences between different societies without being open to manipulation? How to construct an overall index of well-being and what should be the relative role of a priori ethical evaluations and of the opinions of the individuals themselves? What is the relationship between measures of well-being and advantage at the individual and at the aggregate level? To make further progress it is crucial, first, to estimate structural models with individual data, analysing the link between individual achievements, the socioeconomic and environmental background of the persons concerned and the specific features of the individual processes of choice and decision-making; and, second, to integrate the insights from these models in a coherent ethical framework specifying the role of individual preferences and the limits of personal responsibility.
    Keywords: capabilities, opportunities
    Date: 2008–03
  3. By: Esteban Calvo; Kelly Haverstick; Steven A. Sass
    Abstract: Workers often say they want to retire gradually. As retirement is a sharp break with life as they know it, it’s not surprising that many prefer to negotiate the transition a step at a time. Many policymakers also view gradual retirement favorably. They see it as a way to extend careers, shorten retirements, and thereby improve retirement income security. Expanding opportunities for gradual or “phased” retirement has thus gained a prominent place on the policy agenda...
    Date: 2007–10
  4. By: Weehuizen, Rifka (UNU-MERIT, Maastricht University); Sanditov, Bulat (UNU-MERIT, Maastricht University); Cowan, Robin (UNU-MERIT, Maastricht University)
    Abstract: Innovation is a source of increasing productivity, but it is also a source of stress. Psychological research shows that moderate stress increases the productivity of an actor, but above a certain level, additional stress decreases productivity. Stress is reduced by coping behaviour of the actor, and in addition it is buffered by social relations. However, high levels of stress negatively affect social relations, causing social erosion. In a formal model including inter-agent dynamics, we show that the variables moderating stress levels are of crucial importance for identifying the overall effects of different rates of innovation on productivity. The model shows among other things that the existence and nature of relationships of people determine the extent to which a certain rate of innovation effectively results in increasing productivity. In addition, it shows the possibility of multiple equilibria - under some parameter values both high- and low-stress steady states exist; and the dynamics exhibit hysteresis. At very high levels of stress, innovation can result in a dissolution of social relations, and has a negative relationship with the rate of economic growth.
    Keywords: innovation, work-related stress, social relationships
    JEL: O4 J28 C61
    Date: 2008
  5. By: John Knight; Ramani Gunatilaka
    Abstract: This research is among the first to link the literatures on migration and on subjective well-being in developing countries. It poses the question: why do rural-urban migrant households settled in urban China have an average happiness score lower than that of rural households? It examines the hypothesis that migrants have false expectations because they cannot foresee how their aspirations will adapt to their new situation, and draws on research on both psychology and sociology. Estimated happiness functions and decomposition analyses, based on a 2002 national household survey, suggest that their high aspirations in relation to achievement, influenced by their new reference groups, make for unhappiness. The evidence is consistent with the hypothesis.
    Keywords: Rural-Urban Migration, Subjective Well-Being, Happiness, Relative Deprivation, Aspirations, China
    JEL: I32 O15
    Date: 2008

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