nep-hap New Economics Papers
on Economics of Happiness
Issue of 2009‒11‒21
fourteen papers chosen by
Viviana Di Giovinazzo
University of Milano-Bicocca

  1. Why Are Middle-Aged People so Depressed?: Evidence from West Germany By Hilke Brockmann
  2. Kinder - ein Quell der Freude?! By Stephan Humpert
  3. The Gender Pay Gap across Countries: A Human Capital Approach By Solomon W. Polachek; Jun Xiang
  4. Children, Happiness and Taxation By Leonardo Becchetti; Elena Giachin Ricca; Alessandra Pelloni
  5. Deliberative democracy and its informational basis: what lessons from the Capability Approach By Robert Salais
  6. Why do women in former communist countries look unhappy? A demographic perspective By Junji Kageyama
  7. Child poverty as a determinant of life outcomes: Evidence from nationwide surveys in Japan By Oshio, Takashi; Sano, Shinpei; Kobayashi, Miki
  8. Regional income inequality and happiness: Evidence from Japan By Oshio, Takashi; Kobayashi, Miki
  9. Happiness, self-rated health, and income inequality: Evidence from nationwide surveys in Japan By Oshio, Takashi; Kobayashi, Miki
  10. A New Anatomy of the Retirement Process in Japan By Shimizutani, Satoshi
  11. The effect of smoking on individual well-being: a propensity score matching analysis based on nationwide surveys in Japan By Oshio, Takashi; Kobayashi, Miki
  12. Sundays Are Blue: Aren’t They? - The Day-of-the-Week Effect on Subjective Well-Being and Socio-Economic Status By Akay, Alpaslan; Martinsson, Peter
  13. Sociability Predicts Happiness: World-Wide Evidence from Time Series By Stefano Bartolini; Ennio Bilancini; Francesco Sarracino
  14. Job Satisfaction and Quit Intentions of Offshore Workers in the UK North Sea Oil and Gas Industry By Dickey, Heather; Watson, Verity; Zangelidis, Alexandros

  1. By: Hilke Brockmann
    Abstract: Does happiness vary with age? The evidence is inconclusive. Some studies show happiness to increase with age (Diener et al. 1999; Argyle 2001). Others hold that the association is U-shaped with either highest depression rates (Mroczek and Christian, 1998; Blanchflower and Oswald, 2008) or highest happiness levels occurring during middle age (Easterlin, 2006). Current studies suffer from two shortcomings. Firstly, they do not control for three confounding time variables: age, period and cohort effects. Secondly, all empirical research lacks a theoretical explanation as to why age affects happiness. The purpose of our analysis is to contribute to closing both of these research gaps. A social investment model frames the dynamics of happiness across the life-span. The empirical test draws on West German panel data that followed individuals from 1984 to 2005. Descriptive analysis shows a cubic age function with the lowest level at middle age. However, hierarchical three-level variance component models (Rabe-Hesketh and Skrondal, 2005), find significant differences across pre-war and post-war cohorts, baby boomers and offspring of the baby bust as well as deviations during reunification. Yet, cohort and period effects account for less than 10% of the variance. (Un)happiness in midlife is more strongly determined by gender-specific occasional influences and individual characteristics. Both define objective and subjective returns of professional and personal life investments. These social investment decisions date back to early adulthood and bear a high risk of failure during midlife. Unforeseen consequences and long-term private and professional commitments make it costly to adjust, but at the same time new investments may pay off in a pro-longed future. This dilemma turns many middle-aged people into ¿frustrated achievers¿.
    Keywords: Happiness, subjective well-being, gendered life-course, inequality, APC effects (Age-Period-Cohort effects), multi-level analysis, Germany
    Date: 2009
  2. By: Stephan Humpert
    Abstract: It is well known, that the presences of children lower parental happiness. That is based on psychological and economical reasons. The effect holds on for micro data of the GSOEP. The number of children affects an inverse u-shaped curve on happiness. Even an enlargement of the dataset with macroeconomic variables offers the same results. The effect disappears only after generating terms of interaction for catching some effects of macroeconomic uncertainty. Children turn to be positive. This result could be interpreted as consumption utility of children. Considering these factors, children might be a source of joy.
    Keywords: Happiness, children
    JEL: I31 J13
    Date: 2009
  3. By: Solomon W. Polachek; Jun Xiang
    Abstract: The gender wage gap varies across countries. For example, among OECD nations women in Australia, Belgium, Italy and Sweden earn 80% as much as males, whereas in Austria, Canada and Japan women earn about 60%. Current studies examining cross-country differences focus on the impact of labor market institutions such as minimum wage laws and nationwide collective bargaining. However, these studies neglect labor market institutions that affect women’s lifetime work behavior -- a factor crucially important in gender wage gap studies that employ individual data. This paper explicitly concentrates on labor market institutions that are related to female lifetime work that affect the gender wage gap across countries. Using ISSP (International Social Survey Programme), LIS (Luxembourg Income Study) and OECD wage data for 35 countries covering 1970-2002, we show that the gender pay gap is positively associated with the fertility rate (treated exogenously and endogenously with religion as the instrument), positively associated with the husbandwife age gap at first marriage, and positively related to the top marginal tax rate, all factors which negatively affect women’s lifetime labor force participation. In addition, we show that collective bargaining, as found in previous studies, is negatively associated with the gender pay gap.
    Date: 2009
  4. By: Leonardo Becchetti; Elena Giachin Ricca; Alessandra Pelloni
    Abstract: Empirical analyses on the determinants of life satisfaction often include the impact of the number of children variable among controls without fully discriminating between its two (socio-relational and pecuniary) components. In our empirical analysis on the German Socioeconomic Panel we show that, when introducing household income without correction for the number of members, the pecuniary effect prevails and the sign is negative while, when we equivalise income with the most commonly adopted equivalence scales, the non pecuniary (socio-relational) effect emerges and the impact of the variable is positive and significant above a minimal scale elasticity threshold. We further reject slope homogeneity and show that the positive relational effect is stronger for males, below median income households and East Germans. We interpret these subsample split results as driven by heterogeneous opportunity costs. Our empirical results give rise to a paradox: why people have children if the overall (pecuniary plus relational) effect on life satisfaction is negative? We provide in the paper some interpretations consistent with our findings. Some of them are based on motivational complexity. This implies that demographic policies and the paradox are strictly connected. Effectiveness of tax/subsidies impacting on fertility crucially depends on whether the children paradox may be solved within the self-interested rationality paradigm.
    Keywords: Equivalised income, scale elasticities, life satisfaction
    JEL: A13 D61 D10 J17
    Date: 2009
  5. By: Robert Salais (IDHE - Institutions et Dynamiques Historiques de l'Economie - CNRS : UMR8533 - Université Panthéon-Sorbonne - Paris I - Université Paris VIII Vincennes-Saint Denis - Université de Paris X - Nanterre - École normale supérieure de Cachan - ENS Cachan, CMB - Centre Marc Bloch - Ministère des Affaires étrangères et européennes - CNRS : USR3130 - Bundesministerium für Bildung und Forschung - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique)
    Abstract: Amartya Sen's works lead to focus theoretical issues relative to deliberative democracy, not only on optimal procedural rules, but upstream on the substantial content of the informational basis that serves as background to deliberation. The contribution explores the issues to take on board, especially questions on deliberative inquiries and the constitution of publics.
    Keywords: Deliberative Democracy; Capability; Inquiry; Informational Basis; Amartya Sen
    Date: 2009–07–16
  6. By: Junji Kageyama (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: This paper investigates the causes of the positive correlation between happiness and the sex gap in happiness between women and men observed in Europe. Departing from a variety of hypotheses that are based on the sex differences at the individual level, this paper tests whether the positive correlation can be explained by the sex difference in life expectancy. The mechanisms working behind are as follows. First, national average happiness affects the sex gap in life expectancy negatively because men are more fragile to stress (unhappiness). Second, the sex difference in life expectancy influences the sex gap in happiness negatively because it affects the chance of being a widow for women. Using a 3SLS approach, it found that both effects are significant and that the direct effects between happiness and the happiness gap are insignificant. These results indicate that the positive correlation between happiness and the happiness gap is an artifact of the demographic compositional effect resulted from the sex gap in life expectancy.
    Keywords: Europe, economic and social development, life expectancy
    JEL: J1 Z0
    Date: 2009–11
  7. By: Oshio, Takashi; Sano, Shinpei; Kobayashi, Miki
    Abstract: We attempt to examine the extent to which poverty in childhood adversely affects success in adulthood, using micro data from nationwide surveys in Japan and taking into account the recursive structure of life outcomes. We use retrospective assessments of income class at the age of 15, because longitudinal data on household income are not available. After controlling for its endogeneity, we confirm that children from poor families tend to have lower educational attainment, face higher poverty risks, and assess themselves as being less happy and as suffering from poorer health.
    Keywords: Child poverty, Educational attainment, Poverty risk, Happiness, Self-rated health
    Date: 2009–08
  8. By: Oshio, Takashi; Kobayashi, Miki
    Abstract: We investigated how regional income inequality is associated with the individual assessment of happiness based on micro data from nationwide surveys in Japan. Our multilevel analysis using logit and ordered logit models confirmed that individuals who live in areas of high inequality tend to report themselves as less happy, even after controlling for various individual and regional factors. Notably, the fact that happiness depends on not only income but also income inequality indicates the importance of income redistribution for individual well-being. We also find that the association between regional inequality and happiness is not uniform across the different levels of perceived happiness. Moreover, the sensitivities of happiness to regional inequality differ substantially by key individual attributes such as gender, marital status, level of education, occupational status, and political views. Among others, an important finding for social policy is that those of unstable occupational status and those with a lower level of education are more sensitive to regional inequality. Given the fact that these people tend to be less happy than the others, this result points to the risk that regional inequality additionally reduces the well-being of those under unfavorable socioeconomic conditions.
    Keywords: Happiness, income inequality, multilevel analysis, Japan
    Date: 2009–10
  9. By: Oshio, Takashi; Kobayashi, Miki
    Abstract: We examine how regional inequality affects happiness and self-rated health at an individual level by using micro data from nationwide surveys in Japan. Individuals who live in the area of high inequality tend to report themselves as both unhappy and unhealthy, even after controlling for various individual and regional characteristics and taking into account the correlation between the two subjective outcomes. We also investigate how their sensitivities to regional inequality change by key individual attributes. People with an unstable work status are most affected by inequality when assessing both happiness and health.
    Keywords: happiness, self-rated health, income inequality
    Date: 2009–08
  10. By: Shimizutani, Satoshi
    Abstract: In Japan, retirement is a gradual process that transpires over a particularly long period of time. Using large scale micro-level datasets from the Survey of Employment of the Elderly compiled by the Japanese government, we provide some stylized facts on the development of retirement behavior since the 1980s and explore factors affecting the individual retirement decision. First, we observed a general declining trend in the proportion of retired individuals aged 55-59 (especially females) while the proportion of retired individuals aged 65-69 (especially males) increased. Second, the survival analysis on actual retirement age shows that males who worked as an expert/technician or manager before retirement or individuals receiving a larger public pension income are likely to retire earlier. Third, another survival analysis on expected retirement age shows that workers with lower job satisfaction in terms of rewards and males with a larger family size are more likely to retire earlier.
    Keywords: retirement, labor supply of the elderly, survival analysis, Japan
    JEL: J14 J26
    Date: 2009–10
  11. By: Oshio, Takashi; Kobayashi, Miki
    Abstract: Background: It is widely known that smokers tend to feel less satisfied than non-smokers with their jobs and life more generally. However, it is not easy to establish a causal relationship between smoking and individual well-being, because of shared associations with socioeconomic or demographic factors. This issue was largely avoided in the present study, which used propensity score matching methods to investigate whether smoking affects the extent to which individuals are satisfied with their job and other aspects of their life. Methods: Using a large-scale Japanese dataset, we first estimated propensity scores for smoking as a function of numerous socioeconomic and demographic factors. We then matched smokers to non-smokers on the basis of these. We subsequently estimated the average treatment effect, considering smoking as a treatment and smokers as the treated group. We used different matching methods to ascertain the robustness of any effects. Results: We found that smoking made both males and females unhappy, and that it reduced both the extent to which they were satisfied with multiple aspects of their lives (including their job, non-working activities, household's financial conditions, family life, friendships, residential area, health and physical conditions) and their level of self-rated health. Some of these effects differed between males and females. Conclusions: Our propensity score matching analyses identified smoking as having direct adverse effects on individual well-being.
    Keywords: Smoking, Happiness, Job satisfaction, Self-rated Health, Propensity score matching
    Date: 2009–08
  12. By: Akay, Alpaslan (Department of Economics, School of Business, Economics and Law, Göteborg University); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This paper analyses whether individuals are influenced by the day of the week when reporting subjective well-being. By using a large panel data set and controlling for observed and unobserved individual characteristics, we find a large day-of the-week effect. Overall, we find a ‘blue’ Sunday effect with the lowest level of subjective well-being. The day-of-the-week effect differs with certain socio-economic and demographic factors such as employment, marital status and age. The paper concludes with recommendations for future analyses of subjective well-being data and design of data collections.<p>
    Keywords: subjective well-being; day-of-the-week effect
    JEL: C23 D60 I31
    Date: 2009–11–13
  13. By: Stefano Bartolini; Ennio Bilancini; Francesco Sarracino
    Abstract: We provide macro evidence that in the long run the trends of social capital are a strong predictor of the trends of subjective well-being. Our measure of social capital is the individual membership in groups or associations. We apply the bivariate methodology used in Easterlin and Angelescu (2009) to investigate the long run relationship between subjective well-being and income. We consider all countries for which there exist comparable long time series on social capital, for a total of 14 developed and 5 developing countries. Moreover, we provide several robustness checks of Easterlin and Angelescu’s analysis, confirming confirming that they are unrelated in the long-term.
    Keywords: subjective well-being; life satisfaction; social capital; sociability; relational goods; time-trends
    JEL: I31 D60 O10
    Date: 2009–10
  14. By: Dickey, Heather; Watson, Verity; Zangelidis, Alexandros
    Abstract: The North Sea oil and gas industry currently faces recruitment and retention difficulties due to a shortage of skilled workers. The vital contribution of this sector to the U.K. economy means it is crucial for companies to focus on retaining existing employees. One means of doing this is to improve the job satisfaction of workers. In this paper, we investigate the determinants of job satisfaction and intentions to quit within the U.K. North Sea oil and gas industry. We analyse the effect of personal and workplace characteristics on the job satisfaction and quit intentions of offshore employees. The data used were collected using a self-completed questionnaire. Job satisfaction was analysed using an ordinal probit model and quit intentions were analysed using a binary probit model. 321 respondents completed the questionnaire. We find that respondents in good financial situations, those whose skills are closely related to their job, and those who received training reported higher levels of job satisfaction. Furthermore, we establish the importance of job satisfaction, promotion prospects and training opportunities in determining workers’ intentions to quit the offshore oil and gas sector. To encourage better retention, companies should seek to adopt policies that focus not only on pay but also provide promotion and training opportunities aimed at investing in their employees’ skills development.
    Keywords: Job satisfaction; Quit intentions; U.K. offshore industry; Principal components analysis
    JEL: J63 J28
    Date: 2009–11–16

This nep-hap issue is ©2009 by Viviana Di Giovinazzo. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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.