nep-hap New Economics Papers
on Economics of Happiness
Issue of 2008‒09‒05
four papers chosen by
Viviana Di Giovinazzo
University of Milano-Bicocca

  1. Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox By Betsey Stevenson; Justin Wolfers
  2. The developing world is poorer than we thought, but no less successful in the fight against poverty By Chen, Shaohua; Ravallion, Martin
  3. The Effects of Single Mothers' Welfare Participation and Work Decisions on Children's Attainments By Hau Chyi; Orgul Ozturk
  4. Longitudinal analysis of income-related health inequality By Paul Allanson; Ulf-G Gerdtham; Dennis Petrie

  1. By: Betsey Stevenson; Justin Wolfers
    Abstract: The "Easterlin paradox" suggests that there is no link between a society's economic development and its average level of happiness. We re-assess this paradox analyzing multiple rich datasets spanning many decades. Using recent data on a broader array of countries, we establish a clear positive link between average levels of subjective well-being and GDP per capita across countries, and find no evidence of a satiation point beyond which wealthier countries have no further increases in subjective well-being. We show that the estimated relationship is consistent across many datasets and is similar to the relationship between subject well-being and income observed within countries. Finally, examining the relationship between changes in subjective well-being and income over time within countries we find economic growth associated with rising happiness. Together these findings indicate a clear role for absolute income and a more limited role for relative income comparisons in determining happiness.
    JEL: D6 I3 J1
    Date: 2008–08
  2. By: Chen, Shaohua; Ravallion, Martin
    Abstract: The paper presents a major overhaul to the World Bank's past estimates of global poverty, incorporating new and better data. Extreme poverty-as judged by what "poverty" means in the world's poorest countries-is found to be more pervasive than we thought. Yet the data also provide robust evidence of continually declining poverty incidence and depth since the early 1980s. For 2005 we estimate that 1.4 billion people, or one quarter of the population of the developing world, lived below our international line of $1.25 a day in 2005 prices; 25 years earlier there were 1.9 billion poor, or one half of the population. Progress was uneven across regions. The poverty rate in East Asia fell from 80% to under 20 percent over this period. By contrast it stayed at around 50 percent in Sub-Saharan Africa, though with signs of progress since the mid 1990s. Because of lags in survey data availability, these estimates do not yet reflect the sharp rise in food prices since 2005.
    Keywords: Achieving Shared Growth; Rural Poverty Reduction; Population Policies; Services & Transfers to Poor
    Date: 2008–08–01
  3. By: Hau Chyi (WISE, Xiamen University, China); Orgul Ozturk (Moore School of Business, University of South Carolina)
    Abstract: This research examines the effects of mothers' welfare and work decisions on their children's attainments using two types of estimation methods in Stata: (1) an instrumental variables (IV) and (2) a nonlinear simultaneous equation estimation. The estimator employs sibling comparisons in a random effect framework and an instrumental variables approach to address the unobserved heterogeneity that may influence mothers' work and welfare decisions. We use the popular Stata command -ivreg2- to estimate the coefficients. Since production function of a child's ability can be written as a nonlinear function in a mother's decisions, we can also use the -nlsur- command to simulatneously estimate the production function as well as the (first-stage) IV projections. We focus on children who were born to single mothers with twelve or fewer years of schooling. IVs in this study are a mother's expected years of work and welfare use during childhood. The identification comes from the variation in mothers' different economic incentives that arises from the AFDC benefit structures across U.S. states. The estimates imply that, relative to no welfare participation, participating in welfare for one to three years provides up to a 5 percentage point gain in a child's Picture Individual Achievement Test (PIAT) scores. The negative effect of childhood welfare participation on adult earnings found by others is not significant if one accounts for mothers' work decisions. At the estimated values of the model parameters, a mother's number of years of work contributes between $3,000 and $7,000 1996 dollars to her child's labor income, but has no significant effect on the child's PIAT test scores. Finally, children's number of years of schooling is relatively unresponsive to mothers' work and welfare participation choices.
    Date: 2008–07–29
  4. By: Paul Allanson; Ulf-G Gerdtham; Dennis Petrie
    Abstract: This paper considers the characterisation and measurement of income-related health inequality using longitudinal data. The paper elucidates the nature of the Jones and Lopez Nicholas (2004) index of “health-related income mobility” and explains the negative values of the index that have been reported in all the empirical applications to date. The paper further questions the value of their index to health policymakers and proposes an alternative index of “income-related health mobility” that measures whether the pattern of health changes is biased in favour of those with initially high or low incomes. We illustrate our work by investigating mobility in the General Health Questionnaire measure of psychological well-being over the first nine waves of the British Household Panel Survey from 1991 to 1999.
    Keywords: income-related health inequality, mobility analysis, longitudinal data
    JEL: D39 D63 I18
    Date: 2008–08

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