nep-hap New Economics Papers
on Economics of Happiness
Issue of 2009‒01‒03
twelve papers chosen by
Viviana Di Giovinazzo
University of Milano-Bicocca

  1. Subjective Measures of Economic Well-Being and the Influence of Income Uncertainty By Johannes Schwarze
  2. Do People Become Healthier after Being Promoted? By Boyce, Christopher J.; Oswald, Andrew J.
  3. Happiness and Productivity By Oswald, Andrew J.; Proto, Eugenio; Sgroi, Daniel
  4. Relative status and satisfaction By Stefan Boes; Kevin E. Staub; Rainer Winkelmann
  5. Well-being and Trust in the Workplace By John F. Helliwell; Haifang Huang
  6. Comparing Willingness-to-Pay and Subjective Well-Being in the Context of Non-Market Goods By Paul Dolan; Robert Metcalfe
  7. The economic value of virtue By Fabio Mariani
  8. Unintended Consequences of Welfare Reform: The Case of Divorced Parents By Francesconi, Marco; Rainer, Helmut; van der Klaauw, Wilbert
  9. Welfare and Employment: A European Dilemma? By Eichhorst, Werner; Hemerijck, Anton
  10. Poverty in Ireland in Comparative European Perspective By Whelan, Christopher T.; Maitre, Bertrand
  11. Inequality, Happiness and Relative Concerns: What Actually is their Relationship? By Kohei Kawamura
  12. Marital Histories and Economic Well-Being By Julie Zissimopoulos; Benjamin Karney; Amy Rauer

  1. By: Johannes Schwarze
    Abstract: This paper provides evidence that subjective measures of individual well being can be used to study the impact of income uncertainty from an ex ante point of view. Two different measures of subjective well being are under study: Satisfaction with household income and the income evaluation question as developed by Van Praag. It can be shown that satisfaction with income is more affected by ex ante than by ex post volatility of income. The ordinal version of the Van Praag approach might be biased if income uncertainty is essential. The paper was written in 1994.
    Keywords: Income uncertainty, subjective well-being, satisfaction, income evaluation
    JEL: C23 D12 D81 I31
    Date: 2008
  2. By: Boyce, Christopher J. (University of Warwick); Oswald, Andrew J. (University of Warwick)
    Abstract: This paper uses longitudinal data to explore whether greater job status makes a person healthier. Taking the evidence as a whole, promotees do not exhibit a health improvement after promotion. Instead the data suggest that workers with good health are more likely to be promoted. In the private sector, we find that job promotion significantly worsens people's psychological strain (on a GHQ score). For the public sector, there are some tentative signs of the reverse. We discuss caveats to our conclusions, suggest caution in their interpretation, and argue that further longitudinal studies are needed.
    Keywords: health, Whitehall studies, GHQ, locus of control, job satisfaction, mortality, status
    JEL: I1
    Date: 2008–12
  3. By: Oswald, Andrew J. (Department of Economics, University of Warwick); Proto, Eugenio (Department of Economics, University of Warwick); Sgroi, Daniel (Department of Economics, University of Warwick)
    Abstract: Little is known by economists about how emotions affect productivity. To make persuasive progress, some way has to be found to assign people exogenously to different feelings. We design a randomized trial. In it, some subjects have their happiness levels increased, while others in a control group do not. We show that a rise in happiness leads to greater productivity in a paid piece-rate task. The effect is large; it can be replicated; it is not a reciprocity effect; and it is found equally among males and females. We discuss the implications for economics.
    Keywords: Labor productivity ; emotions ; well-being ; happiness ; positive affect ; experimental economics
    Date: 2008
  4. By: Stefan Boes (Socioeconomic Institute, University of Zurich); Kevin E. Staub (Socioeconomic Institute, University of Zurich); Rainer Winkelmann (Socioeconomic Institute, University of Zurich)
    Abstract: This paper investigates the relationship between income satisfaction of adult children and their relative economic status, using data from the German Socio-Economic Panel and income rank as an indicator of status. The results show that children appear to compare their actual economic status with that of their parents, deriving large satisfaction gains from an income rank that is higher than that of their parents. The effect is asymmetric with regard to parents, as these seem not to be ifluenced by their children's income rank.
    Keywords: happiness, income norm, subjective well-being
    JEL: D62 I31
    Date: 2008–12
  5. By: John F. Helliwell; Haifang Huang
    Abstract: This paper summarizes and extends our recent work using life satisfaction regressions to estimate the relative values of financial and non-financial job characteristics. The well-being results show strikingly large values for non-financial job characteristics, especially workplace trust and other measures of the quality of social capital in workplaces. For example, an increase of trust in management that is about one tenth of the scale is equivalent to more than 30% increase in monetary income. We find that these values differ significantly by gender and by union status. We consider the reasons for such large values, and explore their implications for employers, employees, and policy-makers.
    JEL: I31 J16 J31 J51
    Date: 2008–12
  6. By: Paul Dolan; Robert Metcalfe
    Abstract: In order to value non-market goods, economists estimate individuals' willingness to pay(WTP) for these goods using revealed or stated preference methods. We compare theseconventional approaches with subjective well-being (SWB), which is based on individuals'ratings of their happiness or life satisfaction rather than on their preferences. In the context ofa quasi- experiment in urban regeneration, we find that monetary estimates from SWB dataare significantly higher than from revealed and stated preference data. Stigma in revealedpreferences, mental accounting in stated preferences and unspecified duration in SWB ratingsmight explain some of the difference between the valuation methods.
    Keywords: willingness to pay, preferences, life satisfaction, subjective well-being, nonmarketgoods
    JEL: D61 D62 H23 Q51 C21
    Date: 2008–10
  7. 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, IZA - Institute for the Study of Labor)
    Abstract: We model virtue as an asset on the marriage market : since men value virginity in prospective mates, preserving their virtue increases girls' chances of getting a "good" husband, and therefore allows for upward social mobility. Consistent with some historical and anthropological evidence, we find that the diffusion (and the social value) of virginity, across societies and over time, can be determined, among others, by income inequality, gender differences, social stratification and overall economic development. This is a further example of how cultural and moral values can be affected by economic factors.
    Keywords: Mating, marriage, cultural value, social classes, inequality.
    Date: 2008–12
  8. By: Francesconi, Marco (University of Essex); Rainer, Helmut (University of St. Andrews); van der Klaauw, Wilbert (Federal Reserve Bank of New York)
    Abstract: This paper formulates a model to examine the effects of changes in tax-benefit policy on the behavior of divorced parents and the well-being of children in single-parent households. Noncustodial parents choose the level of a child support payment to transfer to custodians. These, in turn, decide over child good expenditures and the allocation of time between market work and parenting. In general, ex-spouses fail to achieve an efficient allocation of their resources. On the custodial side, there are inefficiently high levels of labor supply and inefficiently low levels of expenditures on child goods, while on the noncustodial side child support payments are suboptimally low. Our results rationalize the adverse effects that welfare reforms might have on divorced parents and their children. Such adverse effects may arise because an increase in the custodian's effective wage, either through lower marginal income tax rates or higher childcare subsidies, reinforces the inefficiencies of divorced parents' decisions: that is, such an increase further depresses child support transfers from noncustodial parents and induces custodial parents to work even more. We explore several extensions of this model, link our findings to the existing empirical literature on the impacts of welfare reform, and discuss the implications of our results for policy and further economic analysis.
    Keywords: non-intact families, in-work benefit reform, child care, child support, non-cooperation
    JEL: D13 H31 J22
    Date: 2008–12
  9. By: Eichhorst, Werner (IZA); Hemerijck, Anton (WRR Netherlands Scientific Council for Government Policy)
    Abstract: The majority of the Member States of the European Union have undertaken remarkably comprehensive welfare and labor market reforms in the years since the 1990s. Many of these reforms, however, have not followed the conventional retrenchment and deregulation recipes, but rather took a liking to social pacts, activation, active ageing/avoidance of early retirement, part-time work, lifelong learning, parental leave, gender mainstreaming, flexicurity (balancing flexibility with security), reconciling work and family life. At first sight, these reforms seem to have resulted in relatively robust employment growth, especially for women and more recently older workers. European economic integration has fundamentally recast the boundaries of national systems of employment regulation and social protection, both by constraining the autonomy for domestic policy options but also by opening opportunities for EU-led social and employment coordination and agenda setting.
    Keywords: labor market reforms, European integration, welfare states
    JEL: J21 J58
    Date: 2008–12
  10. By: Whelan, Christopher T. (ESRI); Maitre, Bertrand (ESRI)
    Abstract: In this paper we seek to put Irish poverty rates in a comparative European context. We do so in a context whereby the Irish economic boom and EU enlargement have led to increasing reservations being expressed regarding rates deriving from the EU 'at risk of poverty' indicator. Our comparative analysis reports findings for both overall levels of poverty and variation by household reference person characteristics for this indicator and a consistent poverty measure for Ireland, the UK and five smaller European countries spanning a range of welfare regimes. Our finding demonstrate that the distinctiveness of Ireland's situation lies not in the overall levels of poverty per se but in the very high penalties associated with being in household where the household reference person is a lone parent or excluded from the labour market.
    Date: 2008–11
  11. By: Kohei Kawamura
    Abstract: This paper studies information transmission between multiple agents with different preferences and a welfare maximizing decision maker who chooses the quality or quantity of a public good (e.g. provision of public health service; carbon emissions policy; pace of lectures in a classroom) that is consumed by all of them. Communication in such circumstances su¤ers from the agents. incentive to "exaggerate" their preferences relative to the average of the other agents, since the decision maker's reaction to each agent's message is weaker than in one-to-one communication. As the number of agents becomes larger the quality of information transmission diminishes. The use of binary messages (e.g. "yes" or "no") is shown to be a robust mode of communication when the main source of informational distortion is exaggeration.
    Keywords: : Communication, Public Good Provision, Cheap Talk, Committee, Non-binding Referendum
    JEL: D71 D82 H41
    Date: 2008–06–01
  12. By: Julie Zissimopoulos; Benjamin Karney; Amy Rauer
    Abstract: Using panel data from the Health and Retirement Study the authors analyze the impact of a lifetime of marriage events on wealth levels near retirement. They find that unmarried widowed and divorced men and remarried men with more than one past marital disruption have lower housing wealth than continuously married men and women. Both financial and housing wealth are lower for the same marital categories of women. Each year spent married increases wealth by 4 percent. Observable differences in lifetime earnings, pension and Social Security wealth are not enough to explain the large differences in wealth accumulation across marital groups.
    Date: 2008–11

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