New Economics Papers
on Economics of Happiness
Issue of 2009‒11‒07
five papers chosen by

  1. Procedural Rationality and Happiness By Novarese, Marco; Castellani, Marco; Di Giovinazzo, Viviana
  2. The Life Satisfaction Approach to Environmental Valuation By Frey, Bruno S.; Luechinger, Simon; Stutzer, Alois
  3. Suffer the Little Children: Measuring the Effects of Parenthood on Well-Being Worldwide By Luca Stanca
  4. The Hybrid Multidimensional Index of Inequality By Abdelkrim Araar
  5. Are Lone Mothers Responsive to Policy Changes? Evidence from a Workfare Reform in a Generous Welfare State By Mogstad, Magne; Pronzato, Chiara

  1. By: Novarese, Marco; Castellani, Marco; Di Giovinazzo, Viviana
    Abstract: The Economics of Happiness already recognizes how procedures affect the evaluation of outcomes, although this has only been looked at within the standard framework of substantial rationality. This paper aims to go beyond that kind of approach by linking happiness and procedural rationality, focusing on ‘happiness for choice’ (the individual’s perceived satisfaction after the decision making process). Simon’s model shows the need for defining aspirations whose values are adapted to the past experience in a given environment. Some remarks proposed by Scitovsky’s allow to extend this idea considering the role of creative representation of the world as a way for trying to go beyond the past. These ideas are tested using data on aspirations and satisfaction expressed by students attending an economic course.
    Keywords: Procedural rationality; satisfaction; students; happiness; aspirations
    JEL: D83
    Date: 2009–10–31
  2. By: Frey, Bruno S. (University of Zurich); Luechinger, Simon (University of Zurich); Stutzer, Alois (University of Basel)
    Abstract: In many countries environmental policies and regulations are implemented to improve environmental quality and thus individuals' well-being. However, how do individuals value the environment? In this paper, we review the Life Satisfaction Approach (LSA) representing a new non-market valuation technique. The LSA builds on the recent development of subjective well-being research in economics and takes measures of reported life satisfaction as an empirical approximation to individual welfare. Micro-econometric life satisfaction functions are estimated taking into account environmental conditions along with income and other covariates. The estimated coefficients for the environmental good and income can then be used to calculate the implicit willingness-to-pay for the environmental good.
    Keywords: life satisfaction approach, subjective well-being, non-market valuation, cost-benefit analysis, air pollution
    JEL: Q51 I31 D61 Q53
    Date: 2009–10
  3. By: Luca Stanca
    Abstract: This paper tests the rational-choice approach to fertility decisions by investigating the relationship between parenthood and well-being in a large sample of individuals from 94 countries. We find that world- wide, controlling for demographic and socioeconomic characteristics, having children has a negative effect on well-being. Conditioning on age, gender, marital status and education can only partially help to interpret this finding. We show that the negative effect of parent- hood on well-being is explained by a large adverse impact on financial satisfaction, that on average dominates the positive impact on non- financial satisfaction. The results are robust to alternative empirical specifications and to the inclusion of the reported ideal number of children as a proxy variable to address the endogeneity of parenthood decisions.
    Keywords: well-being, fertility, children, decision-making
    JEL: A13 D10 D61 I31 J17
    Date: 2009–10
  4. By: Abdelkrim Araar
    Abstract: In this paper, we propose a new multidimensional inequality index that satisfies a fundamental set of desired properties. We discuss the case where the social evaluation function of welfare depends simultaneously on unidimensional and multidimensional forms of inequality. We show how this mixed social norm interferes with the most popular axioms conceived specifically for multidimensional indices of inequality. Illustrations of the proposed developments are made using the Cameroonian household surveys, conducted in 2001. It is shown that multidimensional inequality is more pronounced in the Cameroonian semi-urban and rural areas whereas the monetary inequality is more pronounced in urban area.
    Keywords: Multidimensional inequality, social welfare, human development
    JEL: D63 D31 O15
    Date: 2009
  5. By: Mogstad, Magne (Statistics Norway); Pronzato, Chiara (University of Essex)
    Abstract: There is a heated debate in many European countries about a move towards a welfare system that increases the incentives for lone mothers to move off welfare and into work. We analyze the consequences of a major Norwegian workfare reform of the generous welfare system for lone mothers. Our difference-in-differences estimates show that the policy changes were successful in improving labor market attachment and increasing disposable income of new lone mothers. By contrast, the reform led to a substantial decrease in disposable income and a significant increase in poverty among persistent lone mothers, because a sizeable group was unable to offset the loss of out-of-work welfare benefits with gains in earnings. This suggests that the desired effects of the workfare reform were associated with the side-effects of income loss and increased poverty among a substantial number of lone mothers with insurmountable employment barriers. This finding stands in stark contrast to evidence from similar policy changes in Canada, the UK, and the US, and underscores that policymakers from other developed countries should be cautious when drawing lessons from the successful welfare reforms implemented in Anglo-Saxon countries.
    Keywords: lone mothers, workfare reform, difference-in-differences, heterogeneity, earnings, labor force participation, poverty, disposable income
    JEL: C23 I32 I38 J00
    Date: 2009–10

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.