New Economics Papers
on Economics of Happiness
Issue of 2009‒09‒11
nine papers chosen by

  1. Life Satisfaction and Relative Income: Perceptions and Evidence By Guy Mayraz; Gert G. Wagner; Jürgen Schupp
  2. The Effect of Motivations on Social Indirect Reciprocity: an Experimental Analysis By Luca Stanca; Luigino Bruni; Marco Mantovani
  3. Inequality in developing economies: The role of institutional development By Joshy Easaw; Antonio Savoia
  4. Measuring inequality of well-being with a correlation-sensitive multidimensional Gini index By Koen Decancq; María Ana Lugo
  5. Why are child poverty rates so persistently high in Spain? By Carlos Gradín; Olga Cantó
  6. Recent trends in income inequality in Latin America By Leonardo Gasparini; Guillermo Cruces; Leopoldo Tornarolli
  7. Time and income poverty: An interdependent multidimensional poverty approach with German time use diary data By Joachim Merz; Tim Rathjen
  8. Multidimensional poverty and material deprivation By Walter Bossert; Satya R. Chakravarty; Conchita D'Ambrosio
  9. Life satisfaction and household production in a collective model: Evidence from Italy By Lucia Mangiavacchi; Chiara Rapallini

  1. By: Guy Mayraz; Gert G. Wagner; Jürgen Schupp
    Abstract: Using a unique dataset we study both the actual and self-perceived relationship between subjective well-being and income comparisons against a wide range of potential comparison groups, enabling us to investigate a broader range of questions than in previous studies. In questions inserted into a 2008 module of the German-Socio Economic Panel Study we ask subjects to report (a) how their income compares to various groups, such a co-workers, friends, and neighbours, and (b) how important these income comparisons are to them. 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, implying that living in a high-income neighbourhood increases happiness. The perceived importance of income comparisons is found to be uncorrelated with its actual relationship to subjective well-being, suggesting that people are unconscious of its real impact. Subjects who judge comparisons to be important are, however, significantly less happy than subjects who see income comparisons as unimportant. Finally, 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 Study, SOEP
    JEL: D31 D62 D63 I3 I31 Z13
    Date: 2009
  2. By: Luca Stanca; Luigino Bruni; Marco Mantovani
    Abstract: This paper investigates the effects of motivations on the perceived kindness of an action within the context of strong social indirect reci- procity. We test experimentally the hypothesis that, for a given dis- tributional outcome, an action is perceived by a third party to be less kind if it can be strategically motivated. The results do not support this hypothesis: social indirect reciprocity is indeed found to be signif- icantly stronger when strategic motivations cannot be ruled out. We interpret these findings as an indication of the role played by team reasoning in explaining reciprocal behavior.
    Keywords: Indirect Reciprocity, Motivations, Social Preferences, Laboratory Experiments
    JEL: D63 C78 C91
    Date: 2009–08
  3. By: Joshy Easaw (University of Bath); Antonio Savoia (University of Reading and Universitá di Salerno)
    Abstract: In the present paper we study the distributive impact of institutional change in developing countries. In such economies, economic institutions, such as property rights systems, may act to preserve the interests of a rich minority, but this depends crucially on the level of political equality. For example, dominant classes can control key-markets, access to assets and investment opportunities, especially if they enjoy disproportionate political power. We test this hypothesis using cross-section and panel data methods on a sample of low- and middle-income economies from Africa, Asia and Latin America. Results suggest that: (a) increasing the protection of property rights increases income inequality; (b) such an effect is larger in low-democracy environments; (c) a minority of countries have developed a set political institutions capable of counterbalancing this effect.
    Keywords: Inequality, developing economies, institutions, property rights, democracy
    JEL: O15 O17 D70
    Date: 2009
  4. By: Koen Decancq (Katholieke Universiteit Leuven); María Ana Lugo (University of Oxford)
    Abstract: We propose to measure inequality of well-being with a multidimensional generalization of the Gini coefficient. We derive two inequality indices from their underlying social evaluation functions. These functions are conceived as a double aggregation functions: one across the dimensions of well-being, and another across the individuals. They differ only with respect to the sequencing of aggregations. We argue that the sequencing that does not exclude the Gini index to be sensitive to the correlation between the dimensions is more attractive. We illustrate both Gini indices using Russian household data on three dimensions of well-being: expenditure, health and education.
    Keywords: multidimensional inequality, single parameter Gini index, correlation increasing majorization, Russia.
    JEL: D63 I31 O52
    Date: 2009
  5. By: Carlos Gradín (Universidade de Vigo); Olga Cantó (Instituto de Estudios Fiscales and Universidade de Vigo)
    Abstract: Poverty rates among households with children in Spain have been shown to be persistently higher than those among households without children. These higher rates prevail for chronic, transitory and, most remarkably, for recurrent poverty. In order to study the dynamics of poverty transitions in Spain we estimate a dynamic random effects probit model that controls for unobserved heterogeneity and initial conditions using the European Community Household Panel. Our results show differential effects of several individual and household characteristics on the probability of being poor for households with and without children. Of special interest is how labour instability factors can help to explain the outstandingly higher recurrence in poverty among households with children in Spain, compared with other countries.
    Keywords: children, poverty dynamics, random-effects, Spain.
    JEL: D1 D31 I32
    Date: 2009
  6. By: Leonardo Gasparini (CEDLAS – Universidad Nacional de La Plata); Guillermo Cruces (CEDLAS – Universidad Nacional de La Plata); Leopoldo Tornarolli (CEDLAS – Universidad Nacional de La Plata)
    Abstract: This paper documents patterns and recent developments on income inequality in Latin America (LA). New comparative international evidence confirms that LA is a region of high inequality, although maybe not the highest in the world. Income inequality has fallen in the 2000s, suggesting a turning point from the substantial increases of the 1980s and 1990s. The fall in inequality is significant and widespread, but it does not seem to be based on strong fundamentals.
    Keywords: inequality, distribution, education, Latin America
    JEL: C15 D31 I21 J23 J31
    Date: 2009
  7. By: Joachim Merz (LEUPHANA University Lüneburg – IZA); Tim Rathjen (LEUPHANA University Lüneburg)
    Abstract: Income as the traditional one dimensional measure in well-being and poverty analyses is extended in recent studies by a multidimensional poverty concept, however, two important aspects are missing: time as an important dimension and the interdependence of the often only separately counted multiple poverty dimensions. Our paper will contribute to both aspects: We consider time – and income – both as important resources of everyday activities; the interdependence of the poverty dimensions will be evaluated by the German population. Referring to the time dimension, we follow Sen’s capability approach and argue, that restricted genuine, leisure time might exclude from social participation. The substitution between income and genuine leisure time is estimated by a CES-utility function of general utility with the German Socio-Economic Panel. We disentangle time, income and interdependent multidimensional poverty regimes characterising the working poor by a multinomial logit based on German 2001/02 time use diary data. One striking result: the substitution between time and income is significant and we find an important fraction of time poor who are unable to substitute their time deficit by income. These poor people are ignored within the poverty and well-being as well as the time crunch/time famine discussion so far.
    Keywords: Interdependent multidimensional time and income poverty, time and income substitution, extended economic well-being, satisfaction, CES utility function estimation, working poor, German Socio-Economic Panel, German Time Use Surveys 2001/02.
    JEL: D31 D13 J22
    Date: 2009
  8. By: Walter Bossert (Department of Economics and CIREQ, University of Montreal); Satya R. Chakravarty (Indian Statistical Institute, Kolkata); Conchita D'Ambrosio (Università di Milano-Bicocca, DIW Berlin and Econpubblica, Università Bocconi)
    Abstract: We examine the measurement of multidimensional poverty and material deprivation following the counting approach. In contrast to earlier contributions, dimensions of well-being are not forced to be equally important but different weights can be assigned to different dimensions. We characterize a class of individual measures reflecting this feature. In addition, we axiomatize an aggregation procedure to obtain a class of indices for entire societies allowing for different degrees of inequality aversion in poverty. We apply the proposed measures to European Union member states where the concept of material deprivation was initiated.
    Keywords: Multidimensional poverty measurement, material deprivation, equity
    JEL: D63
    Date: 2009
  9. By: Lucia Mangiavacchi (University of Florence); Chiara Rapallini (University of Florence)
    Abstract: The model takes into account the household production and self reported information is interpreted in relation with the sharing rule governing the bargaining process in the family. Considering that the theoretical framework implies a wide concept of full income, which includes the allocation of time between the spouses, we used the self reported information on whole satisfaction in life. We demonstrate that self reported data on satisfaction are useful in recovering the individual share of the household full income and the relevance of the wages in this bargaining process. We find also that non strictly economic individual variables and some household characteristics are important in explaining the Italian sharing rule.
    Keywords: Collective model, Within-household income comparisons, Subjective data, Italy.
    JEL: D1 J22 C3
    Date: 2009

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