New Economics Papers
on Economics of Happiness
Issue of 2009‒08‒16
ten papers chosen by

  1. The money-happiness relationship in transition countries: evidence from Albania By Leonardo Becchetti; Sara Savastano
  2. Understanding Social Inclusion, Social Cohesion and Social Capital By Robert Oxoby
  3. Subjective Indicators By Beatrice Rammstedt
  4. Improvements and Future Challenges for the Research: Infrastructure in the Field of Civil Society By Mareike Alscher; Eckhard Priller
  5. Too poor to grow By Lopez, Humberto; Serven, Luis
  6. Life Satisfaction and Relative Income: Perceptions and Evidence By Guy Mayraz; Jürgen Schupp; Gert Wagner
  7. Capabilities measurement: an empirical investigation By HASAN, HAMID
  8. Subjective Well-Being as Welfare Measure: Concepts and Methodology. By Fischer, Justina AV
  9. The Religious and Anthropological Perspectives of Development and Poverty By Attia, Sayed Moawad
  10. The Impact of Job Stress on Smoking and Quitting: Evidence from the HRS By Padmaja Ayyagari; Jody L. Sindelar

  1. By: Leonardo Becchetti (University of Rome Tor Vergata); Sara Savastano (University of Rome Tor Vergata)
    Abstract: With an empirical analysis on a panel of individuals living in a transition country (Albania) we document that the impact of money on happiness does not depend only on the pecuniary outcome but also from aspirations and conditions leading to its determination. Additional factors which matter are the self perceived economic status and the share earned from remittances (and, more weakly, from social assistance). By looking at different sides of the phenomenon we find that these factors affect levels, changes in income and the probability of “being frustrated achievers”. Finally, differently from what happens in developed countries, higher income levels are negatively and not positively correlated with the probability of frustrated achievement supporting the hypothesis that individuals in transition countries are not in the upper side of a concave happiness-income relationship.
    Keywords: life satisfaction, remittances, economic status
    Date: 2009–08
  2. By: Robert Oxoby
    Abstract: The topics of social capital, social cohesion, and social inclusion are increasingly gaining interest in economics, sociology, and politics, particularly in regards to addressing poverty and designing related policies. Here, we seek to develop the connections and interdependencies between these related concepts. We offer a framework for understanding the differences between these concepts and how they fit together in individual decision making.
    Date: 2009–01–22
  3. By: Beatrice Rammstedt
    Abstract: Subjective indicators have been proven to possess predictive power for a large array of social and economic outcomes. However, most of these measures face serious psychometric shortcomings, namely that the items used are not psychometrically investigated. Further, for the assessment of one and the same construct various different item phrasing and response formats are used in different surveys. In the present paper several recommendations are made to increase the quality and by that also the acceptance and usage of subjective indicators. These include to develop more ultra-short but multi-item measures for subjective indicators. Further, surveys should try to use the same form of measurement, i.e. the same item phrasings and the same response scales. In terms of psychometric properties it is recommended to investigate reliability and validity of the indicators in as much depth as possible. In addition suggestions are made how to investigate the respondent’s judgmental process for the subjective indicators’ measures which allows to obtain a clearer picture of how the item is understood by the respondent and on which cues he bases his judgment.
    Keywords: subjective indicators, reliability, validity, multi-item instruments, cognitive interviews
    Date: 2009
  4. By: Mareike Alscher; Eckhard Priller
    Abstract: Despite the obvious existence of civil society organizations (CSOs) and forms of civic engagement, the data available for this sector remains inadequate. This expert report provides a comprehensive view of the current data situation, reveals existing gaps, and offers suggestions on how these gaps might be closed. The empirical material currently provided by existing data sources - the Federal Statistical Office, statistics from the CSOs themselves, as well as special data and surveys - only register this area separately and to a limited extent, and even then not in a consistent manner. With respect to both civil society organizations and forms of individual engagement there is an inadequate data situation. Questions that have arisen around whether CSOs will remain oriented toward civil society in a context of increased economic pressure on organizations cannot be answered. Similarly, it is nearly impossible to analyze whether civic engagement belies an increased tendency towards monetarization. Since civil society will undoubtedly continue to gain in political and social importance, the long-term task will be to set up a meaningful and a predominantly self-contained system of data collection and provision. This goal can be reached by following up on the existing surveys and databases described in this paper.
    Keywords: civil society; civil society organizations; civic engagement; Volunteers Survey; Johns Hopkins Comparative Nonprofit Sector Project; Handbook on Nonprofit Institutions in the System of National Accounts
    Date: 2009
  5. By: Lopez, Humberto; Serven, Luis
    Abstract: Recent theoretical literature has suggested a variety of mechanisms through which poverty may deter growth and become self-perpetuating. A few papers have searched for empirical regularities consistent with those mechanisms – such as aggregate non-convexities and convergence clubs. However, a seemingly basic implication of the theoretical models, namely that countries suffering from higher levels of poverty should grow less rapidly, has remained untested. This paper attempts to fill that gap and provide a direct empirical assessment of the impact of poverty on growth. The paper’s strategy involves including poverty indicators among the explanatory variables in an otherwise standard empirical growth equation. Using a large panel dataset, the authors find that poverty has a negative impact on growth that is significant both statistically and economically. This result is robust to a variety of specification changes, including (i) different poverty lines; (ii) different poverty measures; (iii) different sets of control variables; (iv) different estimation methods; (v) adding inequality as a control variable; and (vi) allowing for nonlinear effects of inequality on growth. The paper also finds evidence that the adverse effect of poverty on growth works through investment: high poverty deters investment, which in turn lowers growth. Further, the data suggest that this mechanism only operates at low levels of financial development, consistent with the predictions of theoretical models that underscore financial market imperfections as a key ingredient of poverty traps.
    Keywords: Achieving Shared Growth,Population Policies,Inequality,Debt Markets,Economic Theory&Research
    Date: 2009–08–01
  6. By: Guy Mayraz; Jürgen Schupp; Gert Wagner
    Abstract: In questions inserted into the 2008 module of the German-Socio Economic Panel we ask subjects to report their income relative to different reference groups, such as fellow employees, other people in their profession, same age and same gender groups, friends, and neighbours. In addition subjects report how important to them is each of these comparisons. Using these data we are able to study how important income comparisons are to subjective well-being, and which comparisons are relatively more important. We find substantial gender differences, with income comparisons being much better predictors of subjective well-being in men than in women. Generic (same-gender) comparisons are the most important, followed by within profession comparisons. Once generic and within-profession comparisons are controlled for, income relative to neighbours has a negative coefficient, suggesting that a good quality neighbourhood increases happiness with little loss due to negative relative comparisons. The perceived importance of income comparisons is uncorrelated with actual importance. However, subjects who judge comparisons to be important are significantly less happy than subjects who see income comparisons as unimportant. The marginal effect of relative income on subjective well-being does not depend on whether a subject is below or above the reference group income.
    Keywords: Income Comparisons, Relative Income, Life Satisfaction, German Socio Economic Panel
    JEL: D31 D62 D63 I3 I31 Z13
    Date: 2009–07
    Abstract: Sen’s seminal contribution highlights the importance of positive freedom in the measurement of human welfare. The present paper attempts to measure this freedom aspect in an integrated approach. The main contribution of the paper is the simultaneous estimation of capability, functioning, and conversion efficiency with explicit modeling of freedom by latent variable modeling approach. The knowledge dimension of capabilities is modeled and estimated by integrating exploratory and confirmatory statistical methods in a two-stage procedure. In the first stage, Partial Least Squares method is employed to construct latent variable scores. These scores are transformed to relative scores for the sake of comparison and then used to estimate the proposed simultaneous-equation capability model by 3SLS in the second stage. The results show that capability is inversely related to resources and positively related to freedom and functioning. The computed relative capability and freedom inequality ratios are very high whereas relative functioning and efficiency inequality ratios are at a moderate level. The conventional income inequality ratio is lower as compared to the capability dimensions’ ratios and close to the Gini-coefficient. The paper extended the measurement of conversion inefficiency into voluntary and involuntary inefficiency. The paper also suggests criteria for evaluating empirical research within the capability approach framework. The paper recommends development of specific survey instruments in order to create better indicators for capability dimensions and use of latent variable modeling for constructing latent variable scores, and their subsequent use in estimation. These findings suggest a capabilities-oriented public and education policies for the enhancement of knowledge dimension of capabilities in particular and human welfare in general. The focus of education policy should be extended from investment oriented (human capital approach) to value-oriented (human capability approach).
    Keywords: Capabilities; Freedom; Functioning; Conversion Efficiency; Latent variables; Structural equations model; PLS; LISREL; 3SLS
    JEL: D63 I31 C3
    Date: 2009–06–23
  8. By: Fischer, Justina AV
    Abstract: Happiness research is on the rise, but is confounded by competing definitions of subjective well-being based on co-existing concepts, resulting in differing measures and giving rise to different potential policy applications. This paper motivates the societal necessity for using well-being indicators and gives a short overview of the relation between the concepts ‘subjective well-being’, ‘affect’, ‘life satisfaction’, and ‘happiness’. It describes their measurements and operationalizations in surveys, illustrates their philosophical roots, discusses their validity and reliability, and attempts to shed light on the scope of their policy applicability. Focus of this paper is on practical issues when applying measures of subjective well-being for policy evaluations. Target audiences of this paper are the interested public and laypersons, non-expert economists, and statisticians.
    Keywords: Happiness; Life Satisfaction; Subjective Well-Being; Concepts; Methodology; Measurement; Econometrics; History; Behavioral Economics
    JEL: I31 C33 C13 D31 Z0 C81 B11 D01
    Date: 2009–07
  9. By: Attia, Sayed Moawad
    Abstract: This paper examines the role of both religion and anthropology in development and accordingly reducing poverty. Within this introduction I intend to discuss the reason invited me to handle this problem. This reason is that I see both religion and anthropology can play a crucial role in the development process and accordingly lead to reducing poverty.
    Keywords: Anthropology; Religion; Poverty; Development
    JEL: P36 Z1 Z12 P3
    Date: 2009–05
  10. By: Padmaja Ayyagari; Jody L. Sindelar
    Abstract: This paper examines the impact of job-related stress on smoking behavior. We use data from the Health and Retirement Study to examine how high job stress affects the probability that smokers quit and the number of cigarettes smoked for current smokers. We include individual fixed effects, which control for time-invariant factors. Occupational fixed effects are also included to control for occupational characteristics other than stress; time dummies control for the secular decline in smoking rates. Using a sample of people who smoked in the previous wave, we find that job stress is positively related to continuing to smoke and to the number of cigarettes smoked for current smokers. The FE results are of greater magnitude and significance than the OLS results suggesting an important omitted variable bias in OLS estimates. It may be that individuals who are able to handle stress or have better self-control are more likely to have high stress jobs and less likely to smoke. We also find that the smoking/stress relationship is neither explained by heterogeneity across individuals in cognitive ability, risk taking preferences or planning horizons nor is it explained by time varying measures that we observe.
    JEL: I1 I10
    Date: 2009–08

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