nep-hap New Economics Papers
on Economics of Happiness
Issue of 2010‒01‒16
fourteen papers chosen by
Viviana Di Giovinazzo
University of Milano-Bicocca

  1. Relational Capability: An Indicator of Collective Empowerment By Giraud , Gaël; Renouard, Cécile
  2. Income, Aspirations and the Hedonic Treadmill in a Poor Society By John Knight; Ramani Gunatilaka
  3. Estimating Income Poverty in the Presence of Missing Data and Measurment Error By Cheti Nicoletti; Franco Peracchi; Francesca Foliano
  4. Childcare and family ideology in Sweden By Sandra Krapf
  5. The Paradoxes of the Liberal Ethics of Non-interference By Marco Mariotti; Roberto Veneziani
  6. Indicadores Objetivos e Subjetivos de Qualidade de Vida das Famílias Brasileiras Segundo a POF de 2002-2003: Um Estudo Sobre Seus Determinantes Demográficos, Sociais e Econômicos By Marcelo de Sales Pessoa; Marco Antonio C. da Silveira
  7. Happiness and Productivity By Oswald, Andrew J.; Proto, Eugenio; Sgroi, Daniel
  8. Knowledge, Capabilities and the Poverty Trap: The Complex Interplay Between Technological, Social and Geographical Factors By Jan Fagerberg; Martin Srholec
  9. On the relation between income inequality and happiness: Do fairness perceptions matter? By Christian Bjornskov; Axel Dreher; Justina A.V. Fischer; Jan Schnellenbach
  10. Happiness, Deprivation and the Alter Ego By Verme, Paolo
  11. How Does Innovation Affect Worker Well-being? By Erling Barth; Alex Bryson; Harald Dale-Olsen
  12. Public Policy and the Economic Wellbeing of Elderly Immigrants By Baker, Michael; Benjamin, Dwayne; Fan, Elliot
  13. Why we should all care about social institutions related to gender inequality By Boris Branisa; Stephan Klasen; Maria Ziegler
  14. Perceived Job Insecurity and Well-Being Revisited: Towards Conceptual Clarity By Ingo Geishecker

  1. By: Giraud , Gaël (CNRS, Paris School of Economics); Renouard, Cécile (ESSEC Business School)
    Abstract: We define a new index for the collective empowerment of populations based on the capability of actors to have relationships and to enter into networks. This index, called “relational capability” (RC), is dynamic in the sense that the weights of its various components vary across time according to how close the population is to some poverty threshold. It relies on a shift of anthropological viewpoint, putting human relationships at the forefront. RC, which can be formalized in gametheoretic terms of networks, paves the way towards the solution of a number of unsolved issues: Reconciling autonomy and interdependence; unifying the aggregation of individual characteristics with the collective level; questioning unjust institutions and political structures within Sen’s and Nussbaum’s framework of capabilities.
    Keywords: Empowerment; Escaping Poverty Index; Index; Relational Capability
    JEL: I30 I31 I32 I38
    Date: 2009–12
  2. By: John Knight; Ramani Gunatilaka
    Abstract: A specially designed household survey for rural China is used to analyse the determinants of aspirations for income, proxied by reported minimum income need, and the determinants of subjective well-being, both satisfaction with life and satisfaction with income. It is found that aspiration income is a positive function of actual income and reference income, and that subjective well-being is raised by actual income but lowered by aspiration income. These findings suggests the existence of a partial hedonic treadmill, and can help to explain why subjective well-being in China appears not to have risen despite rapid economic growth.
    Keywords: Adaptation, Aspirations, China, Easterlin Paradox, Happiness, Hedonic treadmill, Subjective well-being
    JEL: D60 O12 O15
    Date: 2009
  3. By: Cheti Nicoletti; Franco Peracchi; Francesca Foliano
    Abstract: Reliable measures of poverty are an essential statistical tool for public policies aimed at reducing poverty. In this paper we consider the reliability of income poverty measures based on survey data which are typically plagued by missing data and measurement error. Neglecting these problems can bias the estimated poverty rates. We show how to derive upper and lower bounds for the population poverty rate using the sample evidence, an upper bound on the probability of misclassifying people into poor and non-poor, and instrumental or monotone instrumental variable assumptions. By using the European Community Household Panel, we compute bounds for the poverty rate in ten European countries and study the sensitivity of poverty comparisons across countries to missing data and measurement error problems. Supplemental materials for this article may be downloaded from the JBES website.
    Keywords: Misclassification error, survey non-response, partial identification
    Date: 2009
  4. By: Sandra Krapf (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: This study examines the impact of public and private childcare supply and family ideologies on individual childbearing behavior in Sweden. We assume that childcare services facilitate the reconciliation of family and paid work. However, this relationship is not independent from family images like "dual-earners" or the "male-breadwinner". Although differences in family ideologies are not very pronounced in an egalitarian society like Sweden, we expect that childcare provision encourages young adults to start a family especially if dual-earner families are well accepted. In the empirical part, we use logistic regressions to analyze the entry into parenthood. Based on the Swedish survey "Family and Working Life in the 21st Century" and regional data for the years 2001 to 2003, we find that the probability to become parents is low in regions with a high level of childcare provision. However, in regions where non-familial childcare is highly accepted and, simultaneously, the childcare supply is high individuals are more likely to have a first child. This finding shows the importance of attitudes towards family arrangements on fertility behavior and childcare usage.
    Keywords: Sweden, child care
    JEL: J1 Z0
    Date: 2009–12
  5. By: Marco Mariotti (University of St Andrews); Roberto Veneziani (Queen Mary, University of London)
    Abstract: We analyse the liberal ethics of non-interference applied to social choice. Two liberal principles capturing non-interfering views of society, inspired by J.S. Mill's conception of liberty are examined, which capture the idea that society should not penalise agents after changes in their situation that do not affect others. Two paradoxes of liberal approaches are highlighted. First, it is shown that a restricted view of non-interference, as reflected in the Individual Damage Principle, together with some standard axioms in social choice leads straight to welfare egalitarianism. Second, it is proved that every weakly paretian social welfare ordering that satisfies a general principle of noninterference must be dictatorial. Both paradoxes raise important issues for liberal approaches in social choice and political philosophy.
    Keywords: Liberalism, Noninterference, Equality, Impossibility
    JEL: D63
    Date: 2009–12
  6. By: Marcelo de Sales Pessoa; Marco Antonio C. da Silveira
    Abstract: Este trabalho usa um modelo logit ordenado para investigar os determinantes demográficos, econômicos e sociais do desempenho de um conjunto de indicadores parciais de qualidade de vida das famílias brasileiras, construído com base no questionário da Pesquisa de Orçamentos Familiares (POF) de 2002-2003 sobre avaliação das condições de vida. Muito importante, alguns dos indicadores são de natureza subjetiva, refletindo o grau de satisfação das famílias com aspectos fundamentais de suas condições de vida. O trabalho enfatiza a análise comparativa dos efeitos da renda corrente e da renda permanente sobre os indicadores. Nesse aspecto, resulta que o efeito estimado de choques permanentes sobre a renda corrente é maior que o de choques transitórios. Outro resultado relevante é o reduzido poder de explicação conjunto da renda corrente e do consumo sobre o desempenho dos indicadores, não obstante o efeito estimado significativo dessas variáveis. Esse resultado é consistente com a evidência empírica internacional de que existe um descasamento entre indicadores objetivos e subjetivos de qualidade de vida, o qual pode ser explicado, pelo menos em parte, por diferenças de expectativas e de percepção de renda relativa no universo das famílias. A inclusão de um exaustivo número de variáveis explicativas no modelo, além da renda e do consumo, aumenta seu poder de explicação numa extensão ainda insuficiente para produzir um ajustamento satisfatório aos dados, sugerindo a existência de algum tipo de heterogeneidade não observada explicando boa parte do desempenho dos indicadores de qualidade de vida das famílias brasileiras. This paper uses an ordered logit model to investigate the demographic, economic and social determinants of the performance of some partial life quality indicators for Brazilian households, based on the POF 2002-2003 survey on life conditions evaluation. Some indicators have a subjective content, which measure the degree of households? satisfaction with some important aspects of their life conditions. The study emphasizes the comparative analysis between the effects of current income and permanent income on the indicators. In this aspect, it turns out that the estimated effect of permanent shocks on current income is stronger than that of temporary shocks. Another relevant result is the low joint explanation power of income and consumption, notwithstanding their significant effect on the indicators? performance. This result is consistent with the international empirical evidence of a mismatch between objective and subjective life quality indicators, which can be explained to some extent by differences in expectations and perceived relative income among households. The inclusion of an exhaustive number of explanatory variables into the model?in addition to income and consumption?increases its explanatory power, but not to a large enough extent to produce a satisfactory adjustment to the data. This fact suggests the existence of some type of non-observed heterogeneity explaining a fairly amount of the Brazilian life quality indicators? performance.
    Date: 2009–11
  7. By: Oswald, Andrew J. (University of Warwick); Proto, Eugenio (University of Warwick); Sgroi, Daniel (University of Warwick)
    Abstract: The paper provides evidence that happiness raises productivity. In Experiment 1, a randomized trial is designed. Some subjects have their happiness levels increased, while those in a control group do not. Treated subjects have 12% greater productivity in a paid piece-rate Niederle-Vesterlund task. They alter output but not the per-piece quality of their work. To check the robustness and lasting nature of this kind of effect, a complementary Experiment 2 is designed. In this, major real-world unhappiness shocks – bereavement and family illness – are studied. The findings from (real-life) Experiment 2 match those from (random-assignment) Experiment 1.
    Keywords: labor productivity, emotions, well-being, happiness, positive affect, experimental economics
    JEL: J24 C91
    Date: 2009–12
  8. By: Jan Fagerberg; Martin Srholec
    Abstract: This paper explores the possibility that technological capabilities, to lead to development, need to be accompanied by a broader set of “social capabilities”, reflecting not only the quality of governance but also the spread of values, beliefs and institutions that encourage members of society to actively contribute to the development process. To investigate this issue, a set of empirical indicators, reflecting the capabilities that have been emphazised in the literature as being important for development, was identified. We also take into account the possibility that these capabilities (and their impact) may be conditioned by historically given factors (related to, for example, geography, demography and history). The paper uses factor analysis to analyse the question of how these indicators interrelate and explores their relationship with economic development. We find that technological and social capabilities are indeed strongly related and, moreover, strongly correlated with economic development. The same does not apply for the second factor suggested by the analysis, which mainly reflects the character of countries’ political systems. Thus it is more important economically what countries do than how they decide on it. A strong negative relationship with development was found for the third factor, reflecting the combined effect of high fertility rates, low education and high frequency of serious disease. Arguably, this contributes to a “vicious circle” that makes it difficult for some very poor countries, especially in the tropics, to escape from poverty.
    Date: 2009–12
  9. By: Christian Bjornskov (Nationalökonomisk Institut (Department of Economics), Aarhus School of Business, Aarhus Universitet); Axel Dreher (University of Goettingen, Center for European, Governance and Economic Development Research); Justina A.V. Fischer (University of Hamburg, Institute for Public Finance); Jan Schnellenbach (Alfred Weber Institute for Social Policy and Political Economy, Ruprecht-Karls-Universität Heidelberg)
    Abstract: In this paper, we revisit the association between happiness and inequality. We argue that the perceived fairness of the income generation process affects this association. Building on a two-period model of individual life-time utility maximization, we predict that persons with higher perceived fairness will experience higher levels of life-time utility and are less in favor of income redistribution. In societies with a high level of actual social mobility, income inequality is perceived more positively with increased expected fairness. The opposite is expected for countries with low actual social mobility, due to an increasing relevance of a disappointment effect resulting from unsuccessful individual investments. Using the World Values Survey data and a broad set of fairness measures, we find strong support for the negative (positive) association between fairness perceptions and the demand for more equal incomes (subjective well-being). We also find strong empirical support for the disappointment effect in low social mobility countries. In contrast, the results for high-mobility countries turn out to be ambiguous.
    Keywords: Keywords: Happiness, life satisfaction, subjective well-being, inequality, income distribution, redistribution, political ideology, justice, fairness, World Values Survey
    JEL: I31 H40 D31 J62 Z13
    Date: 2009
  10. By: Verme, Paolo (University of Torino)
    Abstract: The paper focuses on satisfaction with income and proposes a utility model built on two value systems, the `Ego' system - described as one own income assessment relatively to one own past and future income - and the `Alter' system - described as one own income assessment relatively to a reference group. We show how the union of these two value systems and the use of relative deprivation measures can lead to a model able to accommodate a wide range of theories on income and happiness. The model is then tested using the Consortium of Household Panels for European Socio-economic Research (CHER), a collection of 19 panel surveys including over 1.2 m. individual observations. We find absolute income to sit at the intersection between the `Ego' and the `Alter' systems and to play the most prominent role in explaining satisfaction with income. Relative deprivation is also found to be important for understanding the income-happiness nexus while we find income expectations to be less relevant once we control for absolute income. Overall, the `Alter' system (the cross-section comparison with others) seems to be more relevant in valuing income than the `Ego' system (the longitudinal self-comparison of income).
    Keywords: Happiness; Deprivation ; Inequality
    JEL: D6 I3 J3 O1
    Date: 2009–12
  11. By: Erling Barth; Alex Bryson; Harald Dale-Olsen
    Abstract: We explore the effects of management innovations on worker well-being using private sectorlinked employer-employee data for Britain. We find management innovations are associated withlower worker well-being and lower job satisfaction, an effect which becomes more pronouncedwhen we account for the endogeneity of innovation. This is the case for three different countmeasures of innovation - a global measure of innovation and measures for labour innovationsand capital innovations. The effects are ameliorated when workers are covered by a collectivebargaining agreement.
    Keywords: innovation, well-being, job satisfaction, trade unions
    JEL: J28 J51 J81 L23
    Date: 2009–10
  12. By: Baker, Michael; Benjamin, Dwayne; Fan, Elliot
    Abstract: In this paper we document the economic outcomes of elderly immigrants to Canada. Our objective is to describe the extent to which elderly immigrants may have low income (are “in povertyâ€) and their interactions with the Canadian income transfer system. The study has two main parts. First, using a combination of administrative and survey data, we describe the age dimensions of immigration to Canada since 1980, and the evolution of policies directed towards older immigrants (i.e., immigration selection, and eligibility for age-related social security programs). Second, using the SCF and SLID surveys spanning 1981 through 2006, we document the composition and levels of income for immigrants to Canada. We estimate the degree to which older immigrants support themselves, either through working, or living with relatives, as well as the degree that they rely on various income transfer programs, especially OAS, GIS, and Social Assistance (SA). We also summarize their overall living standards, and the extent to which they live in poverty (have “low incomes.â€) Throughout the paper, we also explore the family dimensions to the outcomes of older immigrants: distinguishing between individual and family sources of income, as well as outlining differences in the living arrangements (family structure) of older immigrants, and the implications for measures of their well-being
    Keywords: Immigration; Retirement; Public Pensions; Living arrangements and family structure
    JEL: J61 J26
    Date: 2009–12–28
  13. By: Boris Branisa (University of Göttingen); Stephan Klasen (University of Göttingen); Maria Ziegler (University of Göttingen)
    Abstract: Institutions are a major factor explaining development outcomes. This study focuses on social institutions related to gender inequality understood as long-lasting norms, values and codes of conduct that shape gender roles, and presents evidence on why they matter for development. We derive hypotheses from existing theories and empirically test them at the cross-country level with linear regressions using the newly created Social Institutions and Gender Index (SIGI) and its subindices as measures for social institutions. We find that apart from geography, political system, religion, the level of economic development, one has to consider social institutions related to gender inequality to better account for differences in development. Our results show that social institutions that deprive women of their autonomy and bargaining power in the household, or that increase the private costs and reduce the private returns to investments into girls, are associated with lower female education, higher fertility rates and higher child mortality. Moreover, social institutions related to gender inequality are negatively associated with governance measured as rule of law and voice and accountability.
    Keywords: Social institutions; SIGI; Gender inequality; Fertility; Child and infant mortality; Female education; Governance
    JEL: D63 I10 I20 H1 J16
    Date: 2009–11–13
  14. By: Ingo Geishecker
    Abstract: This paper analyzes the impact of job insecurity perceptions on individual well-being. While previous studies on the subject have used the concept of perceived job insecurity rather arbitrarily, the present analysis explicitly takes into account individual perceptions about both the likelihood and the potential costs of job loss. We demonstrate that any model assessing the impact of perceived job insecurity on individual well-being potentially su®ers from simultaneity bias yielding upward-biased coe±cients. When applying our concept of perceived job insecurity to concrete data from a large household panel survey we ¯nd the true unbiased e®ects of perceived job insecurity to be more than twice the size of estimates that ignore simultaneity. Accordingly, perceived job insecurity ranks as one of the most important factors in employee well-being and paradoxically can be even more harmful than actual job loss with subsequent unemployment.
    Keywords: job security, life satisfaction, unemployment
    JEL: D84 J63 Z13
    Date: 2009–12–07

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