New Economics Papers
on Economics of Happiness
Issue of 2010‒12‒18
eleven papers chosen by

  1. Beyond the Joneses: inter-country income comparisons and happiness By Leonardo Becchetti; Stefano Castriota; Elena Giachin
  2. Genes, Economics, and Happiness By Jan-Emmanuel De Neve; Nicholas A. Christakis; James H. Fowler; Bruno S. Frey
  3. Satisfaction with job and income among older individuals across European countries By Bonsang Eric; Soest Arthur van
  4. Child Support Transfers under Family Complexity By Terry-Ann L. Craigie
  5. Family Structure, Family Stability and Early Child Wellbeing By Terry-Ann Craigie; Jeanne Brooks-Gunn; Jane Waldfogel
  6. Smoking Behaviour and Life Satisfaction: Evidence from the UK Smoking Ban By Timothy Hinks and Andreas Katsaros; Andreas Katsaros
  7. Children, happiness and taxation By Becchetti, Leonardo; Giachin Ricca, Elena; Pelloni , Alessandra
  8. What are we learning from the life satisfaction literature? By Becchetti, Leonardo; Pelloni , Alessandra
  9. Credit access and life satisfaction: evaluating the non monetary effects of micro finance By Becchetti, Leonardo; Conzo, Pierluigi
  10. Inequality and happiness: When perceived social mobility and economic reality do not match By Christian Bjørnskov; Axel Dreher; Justina A.V. Fischer; Jan Schnellenbach
  11. Sustainability and the Measurement of Wealth By Kenneth J. Arrow; Partha Dasgupta; Lawrence H. Goulder; Kevin J. Mumford; Kirsten Oleson

  1. By: Leonardo Becchetti (Department of Economics, Universitˆ Tor Vergata); Stefano Castriota (Department of Economics, Universitˆ di Perugia); Elena Giachin (Department of Economics, Universitˆ Tor Vergata)
    Abstract: Our paper provides some novel evidence on the burgeoning literature on life satisfaction and relative comparisons by showing that in the last 30 years comparisons with the wellbeing of top income countries have generated progressively more negative feelings on a large sample of individuals in the Eurobarometer survey. The paper contributes in two main directions: (i) it shows that countries, and not just neighbors, can be reference groups; (ii) it documents a globalization effect by which distant countries become progressively closer and comparisons among them more intense and relevant. Our findings may be interpreted in support of the well known hypothesis that migratory decisions are affected by the gap in economic wellbeing between origin and destination country since they document that such gap affects individual life satisfaction.
    Keywords: life satisfaction, relative income, standard of living, comparisons
    JEL: D31 E01 I31 J61
    Date: 2010–12
  2. By: Jan-Emmanuel De Neve; Nicholas A. Christakis; James H. Fowler; Bruno S. Frey
    Abstract: Research on happiness has produced valuable insights into the sources of subjective well-being that are of importance to economics. A major nding from this literature is that people exhibit a "baseline" level of happiness that shows persistent strength over time. Here we explore the extent to which baseline happiness is in uenced by genetic variation. Using data from Add Health, we employ a twin study design to show that ge- netic variation explains about 33% of the variation in happiness, and that the in uence of genes varies by gender (women 26%, men 39%) and tends to rise with age. We also present evidence that variation in a specific gene predicts happiness. Individuals with a transcriptionally more eficient version of the serotonin transporter gene (SLC6A4) are significantly more likely to report higher levels of life satisfaction|having one or two alleles of the more eficient type raises the average likelihood of being very satised with one's life by 8.5% and 17.3%, respectively. Finally, using data from an indepen- dent source (the Framingham Heart Study) we show that a linked single nucleotide polymorphism (rs2020933) in the SLC6A4 gene also predicts life satisfaction. These results are the rst to identify a specific gene that may be associated with baseline levels of happiness.
    Keywords: academia; Happiness; Subjective Well-Being; Genetics
    JEL: A12 Z00
    Date: 2010–12
  3. By: Bonsang Eric; Soest Arthur van (METEOR)
    Abstract: Using data on individuals of age 50 and older from 11 European countries, we analyze two economic aspects of subjective well-being of older Europeans: satisfaction with household income, and job satisfaction. Both have been shown to contribute substantially to overall well-being (satisfaction with life or happiness). We use anchoring vignettes to correct for potential differences in response scales across countries. The results highlight a large variation in self-reported income satisfaction, which is partly explained by differences in response scales. When differences in response scales are eliminated, the cross country differences are quite well in line with differences in an objective measure of purchasing power of household income. There are common features in the response scale differences in job satisfaction and income satisfaction. French respondents tend to be critical in both assessments, while Danish and Dutch respondents are always on the optimistic end of the spectrum. Moreover, correcting for response scale differences decreases the cross-country association between satisfaction with income and job satisfaction among workers.
    Keywords: labour economics ;
    Date: 2010
  4. By: Terry-Ann L. Craigie (Princeton University)
    Abstract: When parents engage in childbearing with more than one partner or multi-partnered fertility, this gives rise to a complex family system with strong implications for transfers to children. This study therefore seeks to measure the effect of multi-partnered fertility on formal and informal child support transfers, specifically to non-marital children. Using data from the Fragile Families and Child Wellbeing Study (FFCWS), the study goes beyond previous works by attempting to isolate causal effects of male and female multi-partnered fertility. I find that in general, the probability of receiving formal and/or informal child support contributions decline as the number of children a parent has with more than one partner rises. The study confirms a causal adverse effect of male multi-partnered fertility on receiving any child support payments. These findings underscore the need to revisit child support policies for complex families.
    Keywords: multi-partnered fertility, child support payments, childbearing, fertility, Fragile Families and Child Wellbeing Study
    JEL: J J1 J12
    Date: 2010–11
  5. By: Terry-Ann Craigie (Princeton University); Jeanne Brooks-Gunn (Columbia University); Jane Waldfogel (Columbia University)
    Abstract: This study exploits rich data from the Fragile Families and Child Wellbeing Study (FFCWS) to distinguish the effects of family structure at birth from family stability over time on child cognitive, socio-emotional and health outcomes. We define two models: one that measures family structure at birth only and a second that measures possible changes in family structure since birth. We find that both family structure and stability are important to all child outcomes but for family structure, the results are attenuated by child and demographic characteristics. Family stability effects by contrast, remain significant even after these controls are included and also reveal that the cognitive, socio-emotional and health outcomes of children born to married or cohabiting parents are more adversely affected by changes in family structure over time.
    Keywords: Asthma, Cognitive Ability, Behavioral Problems, Family Structure, Family Stability and Obesity
    JEL: D10 D60 I10 I38
    Date: 2010–11
  6. By: Timothy Hinks and Andreas Katsaros (University of the West of England); Andreas Katsaros (University of Bath)
    Abstract: We use three waves of the British Household Panel Survey to examine whether changes in smoking behaviour are correlated with life satisfaction and whether the recent ban on smoking in public places in England, Wales and Northern Ireland has affected this relationship. We find that smokers who reduced their daily consumption of cigarettes after the ban report significantly lower levels of life satisfaction compared to those who did not change their smoking habits, with heavy smokers particularly affected. No such finding is reported for previous years.
    Keywords: Life Satisfaction Smoking ban
    JEL: D6
    Date: 2010–12
  7. By: Becchetti, Leonardo (Associazione Italiana per la Cultura della Cooperazione e del Non Profit); Giachin Ricca, Elena (Associazione Italiana per la Cultura della Cooperazione e del Non Profit); Pelloni , Alessandra (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)
    Abstract: Empirical analyses on the determinants of life satisfaction often include the impact of the number of children variable among available controls without fully discriminating between the two (sociorelational 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 aggregate 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
    Date: 2010–12–07
  8. By: Becchetti, Leonardo (Associazione Italiana per la Cultura della Cooperazione e del Non Profit); Pelloni , Alessandra (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)
    Abstract: The recent availability of cross-sectional and longitudinal survey data on life satisfaction in a large number of countries gives us the opportunity to verify empirically (and not just to assume) what matters for individuals and what economists and policymakers should take into account when trying to promote personal and societal wellbeing. The wide array of econometric findings available in this booming literature display evidence, generally robust to different cultural backgrounds, on the effects of some important happiness drivers (income,unemployment, marital status) which can be considered “quasi stylized facts” of happiness. If economic policies, for many obvious reasons, cannot maximize self declared life satisfaction as such, we are nonetheless learning a lot from these contributions. In particular, results on the relevance and the risk of crowding out of relational goods, on the revisited inflation/unemployment trade off and, more in general, on the measurement of the shadow value of non market goods obtained with life satisfaction estimates, are conveying relevant information about individual preferences and what is behind utility functions. Such findings suggest us to move beyond anthropological reductionism toward behavioral complexity and to refocus target indicators of economic policies in order to minimize the distance between economic development and human wellbeing.
    Keywords: life satisfaction; shadow value of non market goods; unemployment/inflation trade-off
    Date: 2010–07–15
  9. By: Becchetti, Leonardo (Associazione Italiana per la Cultura della Cooperazione e del Non Profit); Conzo, Pierluigi (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)
    Abstract: Microfinance institutions are used to claim that their impact goes beyond money since rescuing from exclusion uncollateralized poor borrowers significantly affects their dignity, self-esteem, social recognition and, through it, life satisfaction. Our paper aims to verify the validity of this claim by evaluating whether access to microfinance loans has significant direct impact on life satisfaction beyond its indirect impact via income changes. Empirical findings on a sample of poor borrowers in the suburbs of Buenos Aires show that, after controlling for survivorship, selection and interview bias, the number of credit cycles has a significant and positive effect on life satisfaction.
    Keywords: microfinance; happiness; impact study
    Date: 2010–12–07
  10. By: Christian Bjørnskov (Aarhus University); Axel Dreher (University of Goettingen); Justina A.V. Fischer (Faculty of Economics, University of Rome "Tor Vergata"); Jan Schnellenbach (Ruprecht-Karls-Universität Heidelberg,)
    Abstract: In this paper, we revisit the association between happiness and inequality. We argue that the interaction between the perceived and the actual fairness of the income generation process affects this association. Building on a simple model of individual labor-market participation under uncertainty, we predict that higher levels of perceived fairness cause higher levels of utility, and lower preferred levels of income redistribution. In societies with a low level of actual social mobility, income inequality is perceived more negatively with increased perceived fairness, due to the need for unexpected policy changes as a response to many unsuccessful investments of overly optimistic individuals. This effect becomes smaller as actual social mobility increases. Using data on happiness and a broad set of fairness measures from the World Values Survey, we find strong support for the negative (positive) association between fairness perceptions and the demand for more equal incomes (subjective wellbeing). We also find strong empirical support for the disappointment effect in countries with low social mobility. Consistent with our theoretical model, the results for high-mobility countries turn out to be ambiguous.
    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: 2010–11–08
  11. By: Kenneth J. Arrow; Partha Dasgupta; Lawrence H. Goulder; Kevin J. Mumford; Kirsten Oleson
    Abstract: We develop a consistent and comprehensive theoretical framework for assessing whether economic growth is compatible with sustaining well-being over time. The framework focuses on whether a comprehensive measure of wealth – one that accounts for natural capital and human capital as well as reproducible capital – is maintained through time. Our framework also integrates population growth, technological change, and changes in health. We apply the framework to five countries that differ significantly in stages of development and resource bases: the United States, China, Brazil, India, and Venezuela. With the exception of Venezuela, significant increases in human capital enable comprehensive wealth to be maintained (and sustainability to be achieved) despite significant reductions in the natural resource base. We find that the value of “health capital” is very large relative to other forms of capital. As a result, its growth rate critically influences the growth rate of per-capita comprehensive wealth.
    JEL: D69 O10 O47 O50 Q32 Q39
    Date: 2010–12

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