New Economics Papers
on Economics of Happiness
Issue of 2009‒07‒03
nineteen papers chosen by

  1. Why is the World Getting Older? : The Influence of Happiness on Mortality By Cahit Guven; Rudolph Saloumidis
  2. Are Happier People Better Citizens? By Cahit Guven
  3. Between-Person Disparities in the Progression of Late-Life Well-Being By Denis Gerstorf; Nilam Ram; Elizabeth Fauth; Jürgen Schupp; Gert G. Wagner
  4. Living Standards Domain of the Canadian Index of Wellbeing By Andrew Sharpe; Jean-François Arsenault
  5. Conspicuous Consumption and Overlapping Generations? By Ronald Wendner
  6. Experienced Utility versus Decision Utility: Putting the 'S' in Satisfaction By Steven Carter; Michael McBride
  7. The Timing of Maternal Work and Time with Children By Stewart, Jay
  8. Boon or Bane? Others' Unemployment, Well-being and Job Insecurity By Clark, Andrew E.; Knabe, Andreas; Rätzel, Steffen
  9. Good for living? On the relation between globalization and life expectancy By Bergh, Andreas; Nilsson, Therese
  10. Children as Family Public Goods: Some Implications for Fertility By Miriam Steurer
  11. An Alternative Approach to Measure HDI By Hippu Salk Kristle Nathan
  12. Is Child Work Injurious to Health? By Aditi Roy
  13. The paradox of declining female happiness By Betsey Stevenson; Justin Wolfers
  14. How Does Retirement Affect Health? By Stefanie Behncke
  15. Measurement of Income with Time Use with Applications to Hedonic Indicators of Happiness and Misery By William D. Nordhaus
  16. Maternal health and child mortality in rural India By Pandey, Manoj K.
  17. Investigating suicidal trend and its economic determinants: evidence from India By Pandey, Manoj K.; Kaur, Charanjit
  18. On ageing, health and poverty in rural India By Pandey, Manoj K.
  19. Obesity, Self-esteem and Wages By Naci H. Mocan; Erdal Tekin

  1. By: Cahit Guven; Rudolph Saloumidis
    Abstract: World life expectancy has risen by around 20 years in the last 50 years. This period has also witnessed rising happiness levels around the world suggesting that happiness might be one of the causes behind the decline in mortality. We investigate the relationship between happiness and mortality using the German Socio-Economic Panel. We consider doctor visits, self-reported health, and presence of chronic illness as health measures. After controlling for initial health conditions, we find that happiness extends life expectancy. 10 percent increase in happiness decreases probability of death by four percent, and this effect is more pronounced for men and younger people. Happiness plays a more important role for chronically ill people in decreasing mortality than for those who are not chronically ill. The positive influence of happiness on mortality can offset the negative impact of chronic illness. Marriage decreases mortality and this effect appears to work through increased happiness.
    Keywords: Happiness, mortality, health, chronic illness
    JEL: I10 I12
    Date: 2009
  2. By: Cahit Guven
    Abstract: This paper presents evidence on causal influence of happiness on social capital and trust using German Socio-Economic Panel. Exploiting the unexplained cross-sectional variation in individual happiness (residuals) in 1984 to eliminate the endogeneity problem, the paper finds that happier people trust others more, and importantly, help create more social capital. Specifically, they have a higher desire to vote, perform more volunteer work, and more frequently participate in public activities. They also have a higher respect for law and order, hold more association memberships, are more attached to their neighborhood, and extend more help to others. Residual happiness appears to be an indicator of optimism, and has an inverse U-shaped relationship with social capital measures. The findings also suggest that the relationship between happiness and social capital strengthened in the world in the last decade.
    Keywords: happiness, trust, social capital, optimism
    JEL: Z13
    Date: 2009
  3. By: Denis Gerstorf; Nilam Ram; Elizabeth Fauth; Jürgen Schupp; Gert G. Wagner
    Abstract: Throughout adulthood and old age, levels of well-being appear to remain relatively stable. In this chapter, we argue that focusing on a phase of life during which this positive picture does not necessarily prevail promises to help us better understand between-person disparities in the progression of late-life well-being. In a first step, we review empirical evidence from the German Socio-Economic Panel and other large-scale longitudinal data sets to demonstrate that ubiquitous reports of a ¿stability-despite-loss phenomenon¿ of well-being do not generalize into years of life immediately preceding death. Instead, mean-level representations of the end of life are characterized by a rapid deterioration in well-being. In a second step, we highlight the vast heterogeneity in how people experience the last years and consider the role of biopsychosocial individual difference factors to account for such disparities. The select factors reviewed here include socio-demographic characteristics, cognitive fitness, pathology, and disability. In a third step, we argue that macro-contextual factors such as the social, service, and physical characteristics of the communities and societies people are living and dying in also profoundly shape the nature and progression of individual late-life well-being. Our conceptual reasoning forecasts some of the insights that can be gained by pursuing this line of research, but also underscores the challenges researchers must deal with.
    Keywords: Late-Life Well-Being, SOEP, BHPS, HRS
    JEL: I12 I31 Y8
    Date: 2009
  4. By: Andrew Sharpe; Jean-François Arsenault
    Abstract: This paper, which represents the living standards domain of the new Canadian Index of Wellbeing, provides a comprehensive overview of trends in a number of indicators of living standards over the 1981-2008 period in Canada. Part one examines trends in average and median income and wealth indicators in Canada. Part two looks at the distribution of the income and wealth of Canadians over time, including trends in poverty. Part three discusses trends in income fluctuations or volatility. Part four analyzes trends in the economic security of Canadians, including labour market security, food security, housing security, and the security provided by the social safety net. The report also presents a synthesis of overall trends in living standards, discusses living standard measurement issues, and puts forward a set of headline indicators to capture the essentials of what has been happening to the living standards of Canadians. Finally, the report comments on the sustainability of current levels of living standards. The report provides a comprehensive examination of a large number of indicators of living standards in Canada over the last quarter century and has identified a number of these indicators as headline indicators for the new Canadian Index of Wellbeing. The bottom line is that Canada has become a much richer country, but the top quintile has received the lion’s share of rising income and wealth. Looking at the nine headline indicators for which time series are available, one can immediately see that living standards of Canadians have not unambiguously improved between 1981 and 2008. Indeed, Canadians experienced a widening of income and wealth inequalities. There have been poverty reductions, but the reductions were not nearly as large as the increase in wealth inequality. The unemployment rate is down to a record low for the 1981-2008 period, and yet the incidence of long-term unemployment is higher now than in 1981. Economic security measured by the CSLS index has also fallen, spurred by a significant decrease in economic security caused by the financial risk associated with illness. Since 1981, many dimensions of living standards in Canada have not improved, and that in spite of a 52.6 per cent surge in gross domestic product per capita. Looking forward, the challenges for Canada’s policymakers are significant, but need to be tackled if Canada is to become a fairer, healthier and richer country.
    Keywords: Living standards, quality of life, income, housing affordability, wealth, inequality, poverty, productivity, employment quality, net worth, income, disposable income, low income, labour market, economic security, employment, unemployment
    JEL: D63 D60 D30 H50 J30 R20
    Date: 2009–06
  5. By: Ronald Wendner
    Abstract: This paper investigates household decisions, and optimal taxation in an overlapping generations model in which individual utility depends on a weighted average of consumption of ones peers — a “keeping up with the Joneses” consumption externality. In contrast to representative agent economies, the consumption externality generally a?ects steady state savings and growth rates. The nature of the externality’s impact, however, critically depends on the rate at which labor productivity declines with age. For a (strongly enough) declining labor productivity (or when people gradually retire), the consumption externality lowers the steady state propensity to consume out of total wealth. The opposite holds for a constant labor productivity. The market economy can be decentralized by a (reverse) unfunded social security system if the rate of labor productivity decline is high (low). In contrast to previous results, the optimal steady state capital income tax is zero, in spite of the consumption externality.
    Keywords: Consumption externality, labor productivity, gradual retirement, overlapping generations, keeping up with the Joneses, optimal taxation, capital taxation.
    JEL: D91 E21 O40
    Date: 2009–05–05
  6. By: Steven Carter (Department of Economics, University of California-Irvine); Michael McBride (Department of Economics, University of California-Irvine)
    Abstract: Recent research distinguishes an individual's decision utility, inferred from her observed choices, from her experienced utility, which more closely matches the notion of happiness. Using various estimation techniques with a unique experimental data set, we test whether post-choice satisfaction (experienced utility), like decision utility, is S-shaped with loss aversion around a given reference point. We also present a model which estimates the satisfaction function and reference point simultaneously. When pooling the data across individuals, we find an S-shaped satisfaction function in which the reference point depends on past payments, social comparisons, and subjective expectations. There is mixed evidence of loss aversion. At the individual level, there is substantial variation in satisfaction function shapes, although the S-shape is common. Though the two notions of utility are distinct, our findings imply that the two are related at a fundamental level.
    Keywords: Happiness; Utility; Experiment; Value function; Prospect theory
    JEL: C91 D70 I30
    Date: 2009–06
  7. By: Stewart, Jay (U.S. Bureau of Labor Statistics)
    Abstract: I use data from the American Time Use Survey to examine how maternal employment affects when during the day that mothers of pre-school-age children spend doing enriching childcare and whether they adjust their schedules to spend time with their children at more-desirable times of day. I find that employed mothers shift enriching childcare time from workdays to nonwork days. On workdays, full-time employed parents shift enriching childcare time toward evenings, but there is little shifting among part-time employed mothers. I find no evidence that full-time employed mothers adjust their schedules to spent time with their children at more-preferred times of day, whereas part-time employed mothers shift employment to later in the day.
    Keywords: timing of activities, time use, childcare
    JEL: J22 J13
    Date: 2009–06
  8. By: Clark, Andrew E. (PSE); Knabe, Andreas (Free University of Berlin); Rätzel, Steffen (University of Magdeburg)
    Abstract: The social norm of unemployment suggests that aggregate unemployment reduces the well-being of the employed, but has a far smaller effect on the unemployed. We use German panel data to reproduce this standard result, but then suggest that the appropriate distinction may not be between employment and unemployment, but rather between higher and lower levels of labour-market security, at least for men. Men with good job prospects, both employed and unemployed, are strongly negatively affected by regional unemployment. However, insecure employed men and poor-prospect unemployed men are less negatively, or even positively, affected. There is however no clear relationship for women. We analyse labour-market inequality and unemployment hysteresis in the light of our results.
    Keywords: job insecurity, externalities, unemployment, well-being
    JEL: I31 D84 J60
    Date: 2009–06
  9. By: Bergh, Andreas (Ratio and Lund University); Nilsson, Therese (Lund University)
    Abstract: This paper analyzes the relation between three dimensions of globalization (economic, social and political) and life expectancy using a panel of 92 countries over the period 1970-2005. Using different estimation techniques and sample groupings we find a very robust positive effect from economic globalization on life expectancy, even when controlling for income, nutritional intake, literacy, number of physicians and several other factors. The result also holds when the sample is restricted to low income countries only. For political and social globalization we find no robust effects.
    Keywords: Globalization; health; life expectancy; development
    JEL: F02 H51 I10
    Date: 2009–06–09
  10. By: Miriam Steurer (School of Economics, The University of New South Wales)
    Abstract: A two-stage bargaining model is developed to describe how fertility decisions are made in a strategic family setting. Given the assumption that family contracts are incomplete and cannot be used to enforce optimal behavior, it is shown that investments in children (i.e. the fertility rate) may be sub-optimal. This is because the woman may find it in her interest to invest too little in children in stage 1 of the model in order to protect her bargaining status in stage 2. I then consider in the context of this model the impact on fertility rates of changes in child custody rules (in the case of divorce), the wage rate, and the male-female wage differential. I conclude by exploring how the introduction of child subsidies can change the results.
    Keywords: Family bargaining; Fertility; Child subsidies; Labor Participation Rate
    JEL: D13 H55 J13 J14 J22
    Date: 2009–03
  11. By: Hippu Salk Kristle Nathan
    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. This paper questions the appropriateness of LA method and proposes an alternative measure, which is the inverse of the Euclidian distance from the ideal, known as Displaced Ideal (DI) method. The paper shows the advantages of the DI method. The authors strongly propose that the DI method be considered over the LA method in the construction of HDI. [IGIDR WP no. 2008-001]
    Keywords: human development index (HDI); linear averaging(LA) method; displaced ideal (DI) method; Euclidian distance; ideal point; uniform development .
    Date: 2009
  12. By: Aditi Roy (SMU)
    Abstract: Estimating the causal impact of child work on the contemporaneous health of a child has proven quite challenging given non-random selection into the labor market and the inability to find strong and valid instruments. Our data, the Indonesian Family Life Survey is no different. Recognizing the lack of a credible instrument, we instead pursue a different strategy based on the methodology of Altonji et al. (JPE, 2005). This method assesses the robustness of the impact of child work estimated under the assumption of random selection (i.e., selection into child work on observable attributes only) to varying degrees of non-random selection (i.e., selection into child labor on unobservable attributes). If the estimated effect is found to be extremely sensitive to selection on unobservables, then one should be wary about inferring an adverse causal effect of child work. In addition, the nature of the selection process is identified using parametric assumptions. The results are striking, suggesting positive selection of children into work when we consider underweight and high weight status as dependent variables. This indicates that there is both healthy worker selection effect as well as unhealthy worker selection effect. There is however negative selection into work for the children belonging to the intermediate weight range. This heterogeneity in the selection process across the distribution has not been previously identified in the literature. Moreover, we also find evidence suggesting a heterogeneous impact of child work on health once we allow for a modest amount of selection on unobservables. Specifically, we find evidence of a negative causal effect of work on healthier children, but evidence of beneficial impact of work on the least healthy children.
    Keywords: Child work; health; selection on unobservables; Indonesia.
    JEL: I12 J13 J22 J28
    Date: 2009–06
  13. By: Betsey Stevenson; Justin Wolfers
    Abstract: By many objective measures the lives of women in the United States have improved over the past 35 years, yet we show that measures of subjective well-being indicate that women’s happiness has declined both absolutely and relative to men. The paradox of women’s declining relative well-being is found across various datasets, measures of subjective well-being, and is pervasive across demographic groups and industrialized countries. Relative declines in female happiness have eroded a gender gap in happiness in which women in the 1970s typically reported higher subjective well-being than did men. These declines have continued and a new gender gap is emerging—one with higher subjective well-being for men.
    Date: 2009
  14. By: Stefanie Behncke
    Abstract: This paper investigates the effects of retirement on various health outcomes. Data stem from the first three waves of the English Longitudinal Study of Ageing (ELSA). With this informative data, non-parametric matching methods can be applied to identify causal effects. It is found that retirement significantly increases the risk of being diagnosed with a chronic condition. In particular, it raises the risk of developing a cardiovascular disease and being diagnosed with cancer. Estimates also indicate that retirement has quite diverse effects for different individuals.
    Keywords: retirement, health, matching methods, ELSA
    JEL: I10 J14 J26
    Date: 2009–06
  15. By: William D. Nordhaus (Cowles Foundation, Yale University)
    Abstract: The present paper examines several issues involved in expanding national economic accounts and quantitative social indicators to include the "consumption" of time. The first part examines this question in the context of the standard national economic accounts. It derives equilibrium conditions for consumer behavior with market and non-market consumption along with intrinsic values of time in different activities. Using a standard index-number approach, it shows that the growth of real income can be approximated by a weighted average of productivity growth rates in market and non-market productivity and that the valuation of hours drops out of the formula. The second part of the paper examines the role of quantitative social indicators using the approach of hedonic psychology to value time in different activities. It concludes that hedonic measures do not meet the standards for a interpersonally cardinal variable that are required to construct a meaningful quantitative social indicator.
    Keywords: Time use, Hedonic measures, National accounts, Index numbers
    JEL: J22 D1 D13 E01
    Date: 2009–06
  16. By: Pandey, Manoj K.
    Abstract: In this paper, the effect of maternal health on the under-five mortality has been examined. Third wave of micro-level National Family Health Survey 2005-06 data for rural India is used. Using various alternative measures of maternal health, the paper finds strong association between maternal health and child mortality. In particular, the effects of maternal height, weight, presence of any disease and anemia are found significant. Based on our findings, we argue that if the possible generational transfer of poor health from a mother to her child has to avoid, policies aimed at attaining the millennium development goal of reduced child mortality should be directed on improving the health of existing and future mothers.
    Keywords: under-five mortality; maternal height; maternal weight; body mass index; anemia
    JEL: J13 I12 D6
    Date: 2009–06–25
  17. By: Pandey, Manoj K.; Kaur, Charanjit
    Abstract: This paper examines the trend and economic determinants of the suicidal deaths in India. Time-series data over the period 1967-2006 is used from various sources. The paper analyzes the suicidal trend and exploratory relationships between suicide rate and some of the demographic and other economic variates. Further, we use ARDL model to find out the association between suicide and some economic variables. We find that inflation, per capita real GDP and industrial growth encourages the incidences of suicides whereas increased per capita household income helps in reducing suicidal deaths in India.
    Keywords: Suicide; Economic factors; Trends; Time series; ARDL model
    JEL: I12 C22
    Date: 2009–04–15
  18. By: Pandey, Manoj K.
    Abstract: In this paper, the trend and determinants of health and poverty among the elderly in rural India is analysed. Two rounds of National Sample Survey (NSS) data for the year 1995-96 and 2004 are employed. The analysis has been done with independent and pooled datasets. Our analysis shows that levels of consumption poverty have declined marginally between 1995-96 and 2004 while increased proportion of elderly with poor health status is continued. Results suggest that poverty is one of the key determinants of health among elderly in rural India.
    Keywords: health; poverty; elderly
    JEL: J14 I12 I32
    Date: 2009–06–25
  19. By: Naci H. Mocan; Erdal Tekin
    Abstract: Obesity is associated with serious health problems, and it can generate adverse economic outcomes. We analyze a nationally-representative sample of young American adults to investigate the interplay between obesity, wages and self-esteem. Wages can be impacted directly by obesity, and they can be influenced by obesity indirectly through the channel of obesity to self-esteem to wages. We find that female wages are directly influenced by body weight, and self-esteem has an impact on wages in case of whites. Being overweight or obese has a negative impact on the self-esteem of females and of black males. The results suggest that obesity has the most significant impact on white women’s wages.
    JEL: I1 I12 J3 J31
    Date: 2009–06

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