nep-hap New Economics Papers
on Economics of Happiness
Issue of 2008‒11‒04
ten papers chosen by
Viviana Di Giovinazzo
University of Milano-Bicocca

  1. Life expectancy and the environment By Fabio Mariani; Agustin Pérez-Barahona; Natacha Raffin
  2. Exogenous determinants of early-life conditions, and mortality later in life By Gerard J. van den Berg; Gabriele Doblhammer-Reiter; Kaare Christensen
  3. You’re Fired! The Causal Negative Effect of Unemployment on Life Satisfaction By Sonja C. Kassenboehmer; John P. Haisken-DeNew
  4. National flags, national flag colors, and the well-being of countries By Amavilah, Voxi Heinrich
  5. Economic Well-being and Poverty among the Elderly: an Analysis Based on a Collective Consumption Model By Laurens Cherchye; Bram De Rock; Frederic Vermeulen
  6. Self-selection and Subjective Well-being : Copula Models with an Application to Public and Private Sector Work By Simon Luechinger; Alois Stutzer; Rainer Winkelmann
  7. 'Misunderestimating' Living Standards By John Schmitt; David Rosnick
  8. Regional Measures of Human Capital in the European Union By Christian Dreger; Georg Erber; Daniela Glocker
  9. Performance Pay, Risk Attitudes and Job Satisfaction By Thomas Cornelißen; John S. Heywood; Uwe Jirjahn
  10. Unemployment as a Social Norm in Germany By Andrew E. Clark; Andreas Knabe; Steffen Rätzel

  1. By: Fabio Mariani (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Agustin Pérez-Barahona (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Natacha Raffin (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: We present an OLG model in which life expectancy and environmental quality dynamics are jointly determined. Agents may invest in environmental quality, depending on how much they expect to live, but also in order to leave good environmental conditions to future generations. In turn, environmental conditions affects life expectancy. The model produces multiple steady states development regimes) and initial conditions do matter. In particular, some countries may be trapped in a low life expectancy /low environmental quality trap. This outcome is consistent with stylized facts relating life expectancy and environmental performance measures. Possible strategies to escape from this kind of trap are also discussed. Finally, this result is robust to the introduction of human capital through parental education expenditures.
    Keywords: Environmental quality; life expectancy; poverty traps.
    Date: 2008–09
  2. By: Gerard J. van den Berg; Gabriele Doblhammer-Reiter (Max Planck Institute for Demographic Research, Rostock, Germany); Kaare Christensen
    Abstract: We analyze causal effects of conditions early in life on the individual mortality rate later in life. Conditions early in life are captured by transitory features of the macro environment around birth, notably the state of the business cycle around birth, but also food price deviations, weather indicators, and demographic indicators. We argue that these features can only affect high-age mortality by way of the individual early-life conditions. Moreover, they are exogenous from the individual point of view, which is a methodological advantage compared to the use of unique characteristics of the newborn individual or his family or household as early-life indicators. We collected national annual time-series data on the above-mentioned indicators, and we combine these to the individual data records from the Danish Twin Registry covering births in 1873-1906. The empirical analyses (mostly based on the estimation of duration models) indicate a significant negative causal effect of economic conditions early in life on individual mortality rates at higher ages. If the national economic performance in the year of birth exceeds its trend value (i.e., if the business cycle is favorable) then the mortality rate later in life is lower. The implied effect on the median lifetime of those who survive until age 35 is about 10 months. A systematic empirical exploration of all macro indicators reveals that economic conditions in the first years after birth also affect mortality rates later in life.
    JEL: J1 Z0
    Date: 2008–04
  3. By: Sonja C. Kassenboehmer; John P. Haisken-DeNew
    Abstract: This paper examines the impact of unemployment on life satisfaction for Germany 1984–2006, using a sample of men and women from the German Socio- Economic Panel (SOEP). Across the board we find large significant negative effects for unemployment on life satisfaction.This paper expands on previous cornerstone research from Winkelmann and Winkelmann (1998) and explicitly identifies truly exogenous unemployment entries starting from 1991.We find that for women in East andWest Germany, company closures in the year of entry into unemployment produce strongly negative effects on life satisfaction over and above an overall effect of unemployment, providing prima facie evidence of a reduced outside work option, large investments in firm-specific human capital or a family constraint. The compensating variation in terms of income is dramatic, indicating enormous non-pecuniary negative effects of exogenous unemployment due to company closures.
    Keywords: Unemployment, life satisfaction, company closing, gender
    JEL: Z1 J64 J65 J16
    Date: 2008–08
  4. By: Amavilah, Voxi Heinrich
    Abstract: This paper utilizes a simple production function model to assess the relative importance of national flags and national flag colors on the well-being of 93 nations in 2007. It finds that the existence of national flags affects well-being positively. Well-being is inelastic with respect to national flag colors. In other words, it is far more important to well-being to have a national flag than whether the flag is a certain color combination. There is considerable regional variation, but the effects of national flags on well-being are invariant with respect to region.
    Keywords: National well-being; human development index (HDI); national flags; national flag colors
    JEL: C51 O11 D31 O15 C21 D60
    Date: 2008–10–29
  5. By: Laurens Cherchye; Bram De Rock; Frederic Vermeulen
    Abstract: We apply the collective consumption model of Browning, Chiappori and Lewbel (2006) to analyse economic well-being and poverty among the elderly. The model focuses on individual preferences, a consumption technology that captures the economies of scale of living in a couple, and a sharing rule that governs the intra-household allocation of resources. The model is applied to a time series of Dutch consumption expenditure surveys. Our empirical results indicate substantial economies of scale and a wife's share that is increasing in total expenditures. We further calculated poverty rates by means of the collective consumption model. Collective poverty rates of widows and widowers turn out to be slightly lower than traditional ones based on a standard equivalence scale. Poverty among women (men) in elderly couples, however, seems to be heavily underestimated (overestimated) by the traditional approach. Finally, we analysed the impact of becoming a widow(er). Based on cross-sectional evidence, we find that the drop (increase) in material well-being following the husband's death is substantial for women in high (low) expenditure couples. For men, the picture is reversed.
    Keywords: collective model, intra-household allocation, indi¤erence scales, economies of scale, poverty
    JEL: D11 D12 D13 D63 I31
    Date: 2008
  6. By: Simon Luechinger; Alois Stutzer; Rainer Winkelmann
    Abstract: We discuss a new approach to specifying and estimating ordered probit models with endogenous switching, or with binary endogenous regressor, based on copula functions. These models provide a framework of analysis for self-selection in economic well-being equations, where assigment of regressors may be choice based, resulting from well-being maximization, rather than random. In an application to public and private sector job satisfaction, and using data on male workers from the German Socio-Economic Panel, we find that a model based on Frank's copula is preferred over two alternative models with independence and normal copula, respectively. The results suggest that public sector workers are negatively selected.
    Keywords: Ordered probit, switching regression, Frank copula, job satisfaction, German Socio-Economic Panel
    JEL: I31 C23
    Date: 2008
  7. By: John Schmitt; David Rosnick
    Abstract: This issue brief finds that a forecast by Oxford Economics suggesting that the United Kingdom’s living standards will exceed those of the U.S. in 2008 is misleading. CEPR found that the forecast relies on a basic misunderstanding of standard methods of comparing international standards of living. Using the appropriate economic method, in 2008, the GDP per capita of the United States will exceed that of the United Kingdom by almost 19 percent.
    Keywords: standard of living, international standards of living
    JEL: O51 O57 O47 J24
    Date: 2008–01
  8. By: Christian Dreger; Georg Erber; Daniela Glocker
    Abstract: The accumulation of the human capital stock plays a key role to explain the macroeconomic performance across regions. However, despite the strong theoretical support for this claim, empirical evidence has been not very convincing, probably because of the low quality of the data. This paper provides a robustness analysis of alternative measures of human capital available at the level of EU NUTS1 and NUTS2 regions. In addition to the univariate measures, composite indicators based on different construction principles are proposed. The analysis shows a significant impact of construction techniques on the quality of indicators. While composite indicators and labour income measures point to the same direction of impact, their correlation is not overwhelmingly high. Moreover, popular indicators should be applied with caution. Although schooling and human resources in science and technology explain some part of the regional human capital stock, they cannot explain the bulk of the experience.
    Keywords: Human capital indicators, SOEP, regional growth
    JEL: I20 O30 O40 O52
    Date: 2008
  9. By: Thomas Cornelißen; John S. Heywood; Uwe Jirjahn
    Abstract: We present a sorting model in which workers with greater ability and greater risk tolerance move into performance pay jobs and contrast it with the classic agency model of performance pay. Estimates from the German Socio-Economic Panel confirm testable implications drawn from our sorting model. First, prior to controlling for earnings, workers in performance pay jobs have higher job satisfaction, a proxy for on-the-job utility. Second, after controlling for the higher earnings associated with performance pay, the job satisfaction of those in performance pay jobs is the same as those not in such jobs. Third, those workers in performance pay jobs who have greater risk tolerance routinely report greater job satisfaction. While these findings support the sorting model, they would not be suggested by the classic agency model.
    Keywords: Performance Pay, Worker Heterogeneity, Ability, Risk Preferences, Sorting
    JEL: D80 J24 J28 J33 M52
    Date: 2008
  10. By: Andrew E. Clark; Andreas Knabe; Steffen Rätzel
    Abstract: This paper investigates the relationship between the subjective well-being of both the employed and unemployed and regional unemployment rates. While employed men suffer from regional unemployment, unemployed men are significantly less negatively affected. This is consistent with a social-norm effect of unemployment in Germany. We find no evidence of such an offsetting effect for women.
    Keywords: Social norms, unemployment, life satisfaction
    JEL: I31 Z13 J64
    Date: 2008

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