nep-hap New Economics Papers
on Economics of Happiness
Issue of 2010‒12‒04
three papers chosen by
Viviana Di Giovinazzo
University of Milano-Bicocca

  1. Revisiting Michael McBride’s experiment about “Money, happiness, and aspirations” By Abigail Barr
  2. Health, Happiness and Adaptation: an economic perspective By Antonio Bariletti; Guido Citoni
  3. Troubling tradeoffs in the Human Development Index By Ravallion, Martin

  1. By: Abigail Barr (Queen Elizabeth House, University of Oxford)
    Abstract: In a laboratory experiment designed to test aspiration-based theories of happiness, McBride (2010) found no evidence of the predicted negative effect of own past payments on subjects’ satisfaction with their current round payments. This paper presents further analysis of McBride’s data that reveals such an effect. In the treatment where such an effect is most likely to be observed, subjects’ satisfaction with their payments in a given round is negatively affected by the level of payment they received the last time they faced the same payment probabilities. The overall trajectory of their payments when facing the same payment probabilities is also found to have an effect.
    Keywords: Satisfaction, Happiness, Adaptation, Experiment
    JEL: C91 I31
    Date: 2010–11
  2. By: Antonio Bariletti (University of Cassino); Guido Citoni (University of Rome "La Sapienza")
    Date: 2010–11–29
  3. By: Ravallion, Martin
    Abstract: The 20th Human Development Report has introduced a new version of its famous Human Development Index (HDI). The HDI aggregates country-level attainments in life expectancy, schooling and income per capita. Each year's rankings by the HDI are keenly watched in both rich and poor countries. The main change in the 2010 HDI is that it relaxes its past assumption of perfect substitutability between its three components. However, most users will probably not realize that the new HDI has also greatly reduced its implicit weight on longevity in poor countries, relative to rich ones. A poor country experiencing falling life expectancy due to (say) a collapse in its health-care system could still see its HDI improve with even a small rate of economic growth. By contrast, the new HDI's valuations of the gains from extra schooling seem unreasonably high -- many times greater than the economic returns to schooling. These troubling tradeoffs could have been largely avoided using a different aggregation function for the HDI, while still allowing imperfect substitution. While some difficult value judgments are faced in constructing and assessing the HDI, making its assumed tradeoffs more explicit would be a welcome step.
    Keywords: Economic Theory&Research,Inequality,Rural Poverty Reduction,Debt Markets,Labor Policies
    Date: 2010–11–01

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