New Economics Papers
on Economics of Happiness
Issue of 2009‒01‒31
eleven papers chosen by

  1. Authentic Happiness Theory Supported by Impact of Religion on Life Satisfaction: A Longitudinal Analysis with Data for Germany By Headey, Bruce; Schupp, Jürgen; Tucci, Ingrid; Wagner, Gert G.
  2. An Alternative approach to measure HDI By Hippu Salk Kristle Nathan; Srijit Mishra; B. Sudhakara Reddy
  3. Gender inequality, endogenous cultural norms and economic development. By Victor Hiller
  4. Rising Mortality and Life Expectancy Differentials by Lifetime Earnings in the United States By Julian Cristia
  5. Does Retirement Kill You? Evidence from Early Retirement Windows By Coe, N.B.; Lindeboom, M.
  6. Economic Freedom and New Economic Paradigm By Veselin Vukotic
  7. Retirement Income Security and Well-Being in Canada By Michael Baker; Jonathan Gruber; Kevin S. Milligan
  8. Measuring Power and Satisfaction in Societies with Opinion Leaders: Properties of the Qualified Majority Case By René van der Brink; Agnieszka Rusinowska; Frank Steffen
  9. Part-Time Work, Gender and Job Satisfaction: Evidence from a Developing Country By Carmen Pages; Lucia Madrigal; Florencia Lopez Boo
  10. The Economics and Psychology of Inequality and Human Development By Flavio Cunha; James J. Heckman
  11. Happiness and Beliefs in Criminal Environments By Rafael Di Tella; Robert MacCulloch; Hugo Nopo

  1. By: Headey, Bruce (Melbourne Institute of Applied Economic and Social Research); Schupp, Jürgen (DIW Berlin); Tucci, Ingrid (University of Göttingen); Wagner, Gert G. (DIW Berlin)
    Abstract: Using data from the German Socio-Economic Panel Survey (SOEP), this paper assesses the relationship between life satisfaction and religious practice. The main new result here is longitudinal. It is shown that individuals who become more religious over time record long term gains in life satisfaction, while those who become less religious record long term losses. This result holds net of the effects of personality traits, and also in fixed effects panel models. The paper has significant implications for the dominant, paradigm theory in SWB research, namely set-point theory. This theory holds that the long term SWB of adult individuals is stable, because SWB depends on personality traits and other stable genetic factors. It is already clear from the German panel data that about 20% of the population have recorded large long term changes in SWB. New evidence in this paper and elsewhere about the effects of consciously chosen life goals, including religious ones, on SWB is hard to reconcile with set-point theory. It is more in line with authentic happiness theory.
    Keywords: SWB, life satisfaction, set-point theory, authentic happiness theory, longitudinal analysis, SOEP
    JEL: A12 A13 Y80 Z12
    Date: 2008–12
  2. By: Hippu Salk Kristle Nathan (Indira Gandhi Institute of Devleopment Research); Srijit Mishra (Indira Gandhi Institute of Development Research); B. Sudhakara Reddy (Indira Gandhi Institute of Development Research)
    Abstract: The popularly known Human Development Index (HDI) is obtained through linear averaging (LA) of indices in three dimensions - health, education and standard of living. LA method assumes perfect substitutability among the indices. We question its appropriateness and propose an alternative measure, which is the inverse of the Euclidian distance from the ideal. Following Zeleny (1974), we refer to this, as the Displaced Ideal (DI) method. Through an axiomatic characterization, the paper shows that the advantages in the DI method are the following. Uniform, as against skewed, development is rewarded. Through an ideal path, it signals a future course of action. These signify that a given increment in any one dimension, with other dimensions remaining constant, has a greater significance for the index at a lower level than at a higher level. In other words, stagnancy in the dimension that has a lower value is more serious than stagnancy in other dimensions. Finally, an empirical illustration has been done by taking the statistics in Human Development Report 2006. We strongly propose that the DI method be considered over the LA method in the construction of HDI.
    Keywords: Displaced ideal, Euclidian distance, Ideal point, Linear averaging, Uniform development
    JEL: D63 I31 O15
    Date: 2008–01
  3. By: Victor Hiller (Centre d'Economie de la Sorbonne)
    Abstract: This research focuses on the role played by cultural norms in the long run persistence of gender inequalities. Cultural norms about gender roles are considered to be endogenous and can generate gender inequality and low development traps. Indeed, when the gender gap is internalized, it leads to inegalitarian views about gender roles. Due to these inegalitarian beliefs, boys receive more education and the initial gender gap is reinforced. The existence of gender inequality traps is pointed out by the World Bank as a major obstacle for economic development (WDR 2006). The present article allows for a better understanding of the persistence of such traps and the means to escape.
    Keywords: Gender equality, endogenous cultural norms, economics development, inequality traps.
    JEL: J16 O15 Z10
    Date: 2008–11
  4. By: Julian Cristia
    Abstract: Are mortality and life expectancy differences by socioeconomic groups increasing in the United States? Using a unique data set matching high-quality administrative records with survey data, this study explores trends in these differentials by lifetime earnings for the 1983 to 2003 period. The results indicate a consistent increase in mortality differentials across sex and age groups. The study also finds a substantial increase in life expectancy differentials: the top-to-bottom quintile premium increased around 30 percent for men and almost doubled for women. These results complement recent research to point to almost five decades of increasing differential mortality in the United States.
    Keywords: Differential mortality, Life expectancy, Lifetime earnings, Trends
    JEL: I12 J11
    Date: 2009–01
  5. By: Coe, N.B.; Lindeboom, M. (Tilburg University, Center for Economic Research)
    Abstract: The effect that health has on the retirement decision has long been studied. We examine the reverse relationship, whether retirement has a direct impact on later-life health. To identify the causal relationship, we use early retirement window offers to instrument for retirement. We find no negative effects of early retirement on men’s health, and if anything, a temporary increase in self-reported health and improvements in health of highly educated workers. While this is consistent with previous literature using Social Security ages as instruments, we also find that anticipation of retirement might be important, and bias the previous estimates downwards.
    Keywords: retirement;depression;self-reported health;heart attack;cancer;diabetes;instrumental variables
    JEL: J26 I10
    Date: 2008
  6. By: Veselin Vukotic (Faculty for International Economics, Finance and Business, UDG, Podgorica; Institute for Strategic Studies and Prognosis, Podgorica; Institute of Social Sciences, Belgrade)
    Abstract: Are economic freedoms going to clear our way to prosperity? Is the growth of economic freedoms our path to prosperity? Is it in the base of the new understanding of development? If yes, what will necessarily have to be changed in the economic practice of every country and whole world in general? What will be changed in economic theory? What are potential consequences of an attempt to offer resistance to the new concept of development? These are just some of the questions discussed in this paper,whereas the starting point is the economy and economic development of Montenegro.
    Keywords: Economic Freedom, Economic Paradigm, Global economy, National state
    JEL: F02 O43 B52
    Date: 2008–02
  7. By: Michael Baker; Jonathan Gruber; Kevin S. Milligan
    Abstract: A large international literature has documented the labor market distortions associated with social security benefits for near-retirees. In this paper, we investigate the 'other side' of social security programs, seeking to document improvements in wellbeing arising from the provision of public pensions. To the extent households adjust their savings and employment behavior to account for enhanced retirement benefits, the positive impact of the benefits may be crowded out. We proceed by using the large variation across birth cohorts in income security entitlements in Canada that arise from reforms to the programs over the past 35 years. This variation allows us to explore the effects of benefits on elderly well-being while controlling for other factors that affect well-being over time and by age. We examine measures of income, consumption, poverty, and happiness. For income, we find large increases in income corresponding to retirement benefit increases, suggesting little crowd out. Consumption also shows increases, although smaller in magnitude than for income. We find larger retirement benefits diminish income poverty rates, but have no discernable impact on consumption poverty measures. This could indicate smoothing of consumption through savings or other mechanisms. Finally, our limited happiness measures show no definitive effect.
    JEL: H55 J14 J26
    Date: 2009–01
  8. By: René van der Brink (Department of Econometrics and Tinbergen Institute, Free University, The Netherlands); Agnieszka Rusinowska (University of Lyon, Lyon, F-69003, France; CNRS, UMR 5824, GATE, Ecully, F-69130, France; ENS LSH, Lyon, F-69007, France ; Centre Leon Berard, Lyon, F-69003, France; Department of Econometrics and Tinbergen Institute, Free University, The Netherlands); Frank Steffen (The University of Liverpool Management School (ULMS))
    Abstract: A well known and established model in communication policy in sociology and mar- keting is that of opinion leadership. It is based on the idea of a two-step flow of communication. Opinion leaders are actors in a society who are able to affect the behavior of other members of the society called followers. Hence, opinion leaders might have a considerable impact on the behavior of markets and other social agglomerations being made up of individual actors choosing among a number of alternatives. For marketing purposes it appears to be interesting to investigate the effect of different opinion leader-follower structures in markets or any other collective decision-making situations in a society. We study a two-action model in which the members of a society are to choose one action, for instance, to buy or not to buy a certain joint product, or to vote yes or no on a specific proposal. Each of the actors has an inclination to choose one of the actions. By definition opinion leaders have some power over other actors, their followers, and they exercise this power by influencing the behavior of their followers, i.e. their choice of action. After all actors have chosen their actions, a decision- making mechanism determines the collective choice resulting out of the individual choices. The structure of the relations between the actors can be represented by a bipartite digraph. We analyze such digraphs investigating satisfaction and power distributions within societies with and without the opinion leaders. Moreover, we study common properties of the satisfaction and power measures and illustrate our findings and some marketing implications for a society with five members.
    Keywords: Bipartite digraph, influence, inclination, collective choice, opinion leader, follower, satisfaction, power
    JEL: C7 D7
    Date: 2008
  9. By: Carmen Pages; Lucia Madrigal; Florencia Lopez Boo
    Abstract: This paper investigates the relationship between part-time work and job satisfaction using a recent household survey from Honduras. In contrast to previous work for developed countries, this paper does not find a preference for part-time work among women. Instead, both women and men tend to prefer fulltime work, although the preference for working longer hours is stronger for men. Consistent with an interpretation of working part-time as luxury consumption, the paper finds that partnered women with children, poor women or women working in the informal sector are more likely to prefer full-time work than single women, partnered women without children, non-poor women or women working in the formal sector. These results have important implications for the design of family and child care policies in low-income countries.
    Keywords: Job Satisfaction, Gender, Part-time work, Job Flexibility.
    JEL: C13 J16 J28
    Date: 2009–01
  10. By: Flavio Cunha; James J. Heckman
    Abstract: Recent research on the economics of human development deepens understanding of the origins of inequality and excellence. It draws on and contributes to personality psychology and the psychology of human development. Inequalities in family environments and investments in children are substantial. They causally affect the development of capabilities. Both cognitive and noncognitive capabilities determine success in life but to varying degrees for different outcomes. An empirically determined technology of capability formation reveals that capabilities are self-productive and cross-fertilizing and can be enhanced by investment. Investments in capabilities are relatively more productive at some stages of a child's life cycle than others. Optimal child investment strategies differ depending on target outcomes of interest and on the nature of adversity in a child's early years. For some configurations of early disadvantage and for some desired outcomes, it is efficient to invest relatively more in the later years of childhood than in the early years.
    JEL: A12
    Date: 2009–01
  11. By: Rafael Di Tella; Robert MacCulloch; Hugo Nopo
    Abstract: This paper uses newly available data to describe the distribution of crime victimization and other criminal activities (including drug trafficking and corruption) around the world. The paper then documents a negative (positive) correlation between measures of criminal activity and happiness and measures of positive (negative) emotions. The paper also studies the correlation between ideological beliefs and criminal activity, finding that crime victims are more likely to believe that hard work does not pay and that the government should increase the amount of redistribution to the poor.
    Keywords: Happiness, crime, beliefs, income distribution
    JEL: I39 K42 Y80
    Date: 2009–01

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