New Economics Papers
on Economics of Happiness
Issue of 2010‒09‒25
four papers chosen by

  1. Well-Being Inequality and Reference Groups - An Agenda for New Research By Bernard van Praag
  2. A household-based Human Development Index By Harttgen, Kenneth; Klasen, Stephan
  3. Subjective Well Being and the Impact of Climate Change By Grün, Carola; Grunewald, Nicole
  4. Risky social choice with approximate interpersonal comparisons of well-being By Pivato, Marcus

  1. By: Bernard van Praag (University of Amsterdam)
    Abstract: In this paper it is argued that subjective well-being of the individual depends on two types of variables. The first type consists of characteristics of the individual himself, such as age, health, income, etc. The second type of variables consists of the characteristics of the individuals belonging to his reference group. The vast literature about happiness, quality of life, and well-being informs us extensively about the effects of objective variables. How the second type affects well-being is much less investigated. It is argued that the concept of well-being inequality cannot be properly defined without taking the referencing process into account. The reference effect depends on how frequently individuals compare with others and on the degree of social transparency in society. We attempt to give a structural embedding of the idea of reference groups in SWB-models. In this paper we employ the reference-extended model for incorporating in happiness studies the concept of inequality in happiness or SWB. Finally, we plead for an extension of the present happiness paradigm by setting up a new additional agenda for empirical research in order to get quantified knowledge about the referencing process. As a first step we suggest a new question module to be included in new survey questionnaires. <p> Accepted for publication in <A href="">Journal of Economic Inequality</A>.
    Keywords: subjective well-being; happiness; inequality; reference group
    JEL: D31 D62 D63 I31
    Date: 2010–01–28
  2. By: Harttgen, Kenneth; Klasen, Stephan
    Abstract: One of the most serious weaknesses of the human development index (HDI) is that it considers only average achievements and does not take into account the distribution of human development within a country or by population subgroups. All previous attempts to capture inequality in the HDI have also used aggregate information and there exists no HDI at the household level. This paper provides a method and illustration for calculating the HDI at the household level. This immediately allows the analysis of the HDI by any kind of population subgroups and by household socioeconomic characteristics. Furthermore, it allows to apply any kind of inequality measure to the HDI across population subgroups and over time. We illustrate our approach for 15 developing countries. Inequality in the HDI is largest in poorer countries, particularly in Sub-Saharan Africa. We also find large inequalities within countries between population subgroups, particularly by income, location, and education of the household head. We also find considerable inequality when looking at inequality measures like the Theil or the Gini coefficient; within-group inequality is, however, invariably larger than between-group inequality and inequality in the HDI within countries is of similar order of magnitude of inequality in the HDI between countries. --
    Keywords: Human Development Index,Income Inequality,Differential Mortality,Inequality in Education
    JEL: I10 I20 I32 O10 O50
    Date: 2010
  3. By: Grün, Carola; Grunewald, Nicole
    Abstract: We analyze the relationship between subjective well-being as a non-income welfare measure and climate variables such as temperature, precipitation rates or cloud covered days. Therewith, we estimate the effects from events related to climate change on subjective well-being and point out possible welfare losses and gains due to climate change. Even though that there is a growing number of research done on well-being in terms of income measures and climate change, there is only little research done on the effect of climate change and non-income measures such as subjective well-being. Further those studies lack some comparison. Except Rehdanz and Maddison (2005) all studies turn to national analyses when analyzing the influence of climate on subjective well-being. So far there are very few studies on middle- and none on low-income countries done, but at the same time extreme weather events may especially affect people in poorer countries. Therefore, we test this relationship for low and middle-income countries in Latin America and put the results in comparison to earlier studies. We apply survey data from the World Value Survey and Latinobarometro which cover the years 1985- 2008. In a panel study we estimate subjective well-being in Latin America and control for gender, age, marital status and income. Further we introduce climate variables such as the deviation from the mean temperature and precipitation rates as to analyze how the rising variance in climate affects subjective well being. --
    Keywords: Subjective Well Being,Climate Change
    JEL: I30 Q54
    Date: 2010
  4. By: Pivato, Marcus
    Abstract: We develop a model of social choice over lotteries, where people's psychological characteristics are mutable, their preferences may be incomplete, and approximate interpersonal comparisons of well-being are possible. Formally, we suppose individual preferences are described by a von~Neumann-Morgenstern (vNM) preference order on a space of lotteries over psychophysical states; the social planner must construct a vNM preference order on lotteries over social states. First we consider a model when the individual vNM preference order is incomplete (so not all interpersonal comparisons are possible). Then we consider a model where the individual vNM preference order is complete, but unknown to the planner, and thus modeled by a random variable. In both cases, we obtain characterizations of a utilitarian social welfare function.
    Keywords: interpersonal comparisons; social welfare; social choice; utility; utilitarian; von Neumann-Morgenstern; risk
    JEL: D70 D63 D81
    Date: 2010–09–20

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