New Economics Papers
on Economics of Happiness
Issue of 2008‒05‒05
eight papers chosen by

  1. Psychological and Subjective Wellbeing: A Proposal for Internationally Comparable Indicators By Emma Samman
  2. MACROECONOMIC DETERMINANTS OF POOR’S HAPPINESS By Muhammad Shahbaz, Shahbaz; Naveed Aamir, Naveed
  3. Employment: A proposal for internationally comparable indicators By Maria Ana Lugo
  4. The ability to go about without shame: A proposal for internationally comparable indicators of shame and humiliation By Diego Zavaleta Reyles
  5. Safety and Security: A proposal for Internationally Comparable Indicators of Violence By Rachael Diprose
  6. Agency & Empowerment: A proposal for internationally comparable indicators By Solava Ibrahim and Sabina Alkire
  7. Income per natural: Measuring development as if people mattered more than places By Michael Clemens and; Lant Pritchett
  8. How Do the BRICs Stack Up? Adding Brazil, Russia,India, and China to the Environment Component of the Commitment to Development Index By David Roodman

  1. By: Emma Samman
    Abstract: This article sets out a proposal to measure psychological and subjective states of wellbeing in individual and household surveys. In particular, it proposes a short list of seven indicators, and a module containing the relevant questions needed to construct them. The indicators address both eudaimonic and hedonic criteria, and cover four aspects of wellbeing: 1) meaning in life; 2) psychological wellbeing – following self-determination theory, this includes the three “basic psychological needs” of autonomy, competence and relatedness; 3) domain-specific and overall life satisfaction; and 4) happiness. The article recommends that further research explore the connections between these indicators, as well as their relationship with objective measures of disadvantage. While reaffirming that perceptual states should not be treated as aims of government policy, it is argued that they may provide a richer understanding of peoples’ values and behavior – and therefore that further research on the subject could deepen our understanding of capability poverty.
    Date: 2007–05
  2. By: Muhammad Shahbaz, Shahbaz; Naveed Aamir, Naveed
    Abstract: There is not much research on welfare-economics from human wellbeing (happiness) side, the main reason is that this is qualitative and subjective phenomenon & not so easy to capture for measurement. In the present endvour, we tried to capture it (happiness) from the opposite side of poverty index. We employed modified ARDL technique for long run friendship between Poor’s happiness and some macroeconomic influencing factors; short run dynamic behavior is scrutinized through ECM. The findings about Poor’s happiness and its determinants show that happiness of poor individuals is highly influenced from macroeconomics shocks prevailed in the economy. Economic growth or rise in GDP per capita declines the level of Poor’s happiness due to upper-echelon phenomenon in long span of time in Pakistan. Inflation influences the purchasing power of poor segments of population and definitely affects the happiness negatively in both the periods. Enhancement in remittances seems to push happiness or Poor’s welfare levels upward significantly. Increase in indirect taxes especially sales taxes associated with low levels of happiness of poor individuals in a small developing economy like Pakistan. Trade-openness improves happiness rankings of poor segments of population through its direct & indirect channels. Finally, a low level of happiness is associated with low urbanization in short span of time.
    Keywords: Happiness; modified ARDL Co-integration
    JEL: I31 C22
    Date: 2007–10–09
  3. By: Maria Ana Lugo
    Abstract: Employment is the main source of income for most families in the world. While it is certainly not a new dimension of well-being, it is sometimes forgotten in human development studies and poverty reduction policies or, at least, not considered in the depth it deserves. This paper proposes seven indicators of employment to be added to multi-purpose household surveys which, we argue, are crucial to a comprehensive understanding of causes and implications of poverty around the world. Traditional approaches to labour market indicators present two main weaknesses. First, in most cases, they are not as relevant in the developing world as they are in developed economies, and hence do not provide an accurate picture of labour markets in these countries. Second, surveys that collect a broader set of questions on employment do not always include extensive questions on the household and its members. The indicators proposed are informal employment; income from employment (including self-employment earnings); occupational hazard; under/over employment; multiple activities; and discouraged unemployment. The aim is to complement ‘traditional’ indicators to provide a deeper understanding of both the quantity and quality of employment.
    Date: 2007–05
  4. By: Diego Zavaleta Reyles
    Abstract: Shame and humiliation are central to the understanding of poverty yet internationally comparable data on this dimension are missing. Based on existing indicators from related fields, this article suggests eight indicators to measure specific aspects of shame and humiliation that could start an in-depth debate around this topic. The indicators are the following: whether respondents would feel shame if they were poor; levels of shame proneness; perceptions of respectful treatment, unfair treatment and prejudiced treatment; whether respondents perceive that their ethnic, racial or cultural background affects their chances of getting jobs, services and education; whether respondents perceive that economic conditions affect their chances of getting jobs, services and education; and levels of accumulated humiliation.
    Date: 2007–05
  5. By: Rachael Diprose
    Abstract: Violence impedes human freedom to live safely and securely, and can sustain poverty traps in many communities. A key challenge for academics, policy makers and practitioners working broadly in programs aimed at poverty alleviation, including violence prevention, is the lack of reliable and comparable data on the incidence and nature of violence. This paper proposes a household survey module for a multi-dimensional poverty questionnaire which can be used to complement the available data on the incidence of violence against property and the person, as well as perceptions of security and safety. Violence and poverty are inextricably linked, although the direction of causality is contested if not circular. The module uses standardised definitions which are clear, can be translated cross-culturally and clearly disaggregate different types of interpersonal violence, thereby bridging the crime-conflict nexus.
    Date: 2007–05
  6. By: Solava Ibrahim and Sabina Alkire
    Abstract: This article proposes a short list of internationally-comparable indicators of individual agency and empowerment (and the corresponding survey questions). Data from these indicators would enable researchers to explore research and policy issues such as the interconnections between empowerment and economic or human development. The paper surveys definitions of agency and empowerment and adopts the definition from Amartya Sen, supplemented by Rowlands’ typology. The proposed ‘short list’ of indicators includes: control over personal decisions; domain-specific autonomy; household decision-making; and the ability to change aspects in one’s life at the individual and communal levels. The strengths and weaknesses of each indicator are discussed, as is the need to supplement this shortlist with other variables. To ensure the feasibility of the proposal, we rely on previously-fielded questions wherever possible.
    Date: 2007–05
  7. By: Michael Clemens and; Lant Pritchett
    Abstract: It is easy to learn the average income of a resident of El Salvador or Albania. But there is no systematic source of information on the average income of a Salvadoran or Albanian. We create a first estimate a new statistic: income per natural—the mean annual income of persons born in a given country, regardless of where that person now resides. If income per capita has any interpretation as a welfare measure, exclusive focus on the nationally resident population can lead to substantial errors of the income of the natural population for countries where emigration is an important path to greater welfare. The estimates differ substantially from traditional measures of GDP or GNI per resident, and not just for a handful of tiny countries. Almost 43 million people live in a group of countries whose income per natural collectively is 50% higher than GDP per resident. For 1.1 billion people the difference exceeds 10%. We also show that poverty estimates are very different for national residents and naturals; for example, 26 percent of Haitian naturals who are not poor by the two-dollar-a-day standard live in the United States. These estimates are simply descriptive statistics and do not depend on any assumptions about how much of observed income differences across naturals is selection and how much is a pure location effect. Our conservative, if rough, estimate is that three quarters of this difference represents the effect of international migration on income per natural. This means that departing one’s country of birth is today one of the most important sources of poverty reduction for a large portion of the developing world. If economic development is defined as rising human well being, then a residence-neutral measure of well-being emphasizes that crossing international borders is not an alternative to economic development, it is economic development.
    Keywords: economic development, migration
    JEL: F22 O15
    Date: 2008–03
  8. By: David Roodman
    Abstract: The Commitment to Development Index (CDI) ranks 21 of the world’s richest countries on their dedication to policies that benefit the five billion people living in poorer nations. Moving beyond simple comparisons of foreign aid, the CDI ranks countries on seven themes: quantity and quality of foreign aid, openness to developing-country exports, policies that influence investment, migration policies, stewardship of the global environment, security policies and support for creation and dissemination of new technologies. This year for the first time, CGD research fellow David Roodman extended the environment component of the Index to cover four of the biggest developing countries: Brazil, Russia, India and China, a group Goldman Sachs dubbed the “BRICs.” This working paper explores the indicators that make up the environment component (global climate, sustainable fisheries, and biodiversity and global ecosystems) and explains how the BRIC countries stack up to their right-country counterparts. He finds that the BRICs score remarkably well compared to the 21 rich countries covered by the Index: when thrown in with the usual 21, they rank second, fourth, fifth, and eleventh. They generally perform well on the greenhouse gas emissions, consumption of ozone-depleting substances, and tropical timber imports. And the BRICs have joined important international environmental accords. As a group, their major weakness is low gas taxes. In addition, Amazon deforestation and heavy fossil fuel use pull Brazil and Russia, respectively, below the CDI 21 average on greenhouse emissions per capita. China’s abstention from the U.N. fisheries agreement puts it a half point below the other BRICs.
    Keywords: environment, Commitment to Development Index (CDI)
    Date: 2007–10

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.