New Economics Papers
on Economics of Happiness
Issue of 2011‒01‒23
six papers chosen by

  1. Broke, Ill, and Obese: The Effect of Household Debt on Health By Matthias Keese; Hendrik Schmitz
  2. Life satisfaction and income inequality By Paolo Verme
  3. Beyond the Joneses: Inter-country income comparisons and happiness By Leonardo Becchetti; Stefano Castriota; Elena Giachin
  4. Why has happiness inequality increased? Suggestions for promoting social cohesion By Leonardo Becchetti; Riccardo Massari; Paolo Naticchioni
  5. Money, sociability and happiness : are developed countries doomed to social erosion and unhappiness? By SARRACINO Francesco
  6. Does Owning Your Home Make You Happier? Impact Evidence from Latin America By Inder Ruprah

  1. By: Matthias Keese; Hendrik Schmitz
    Abstract: We analyze the effect of household indebtedness on different health outcomes using data from the German Socio-Economic Panel from 1999–2009. To establish a causal effect, we rely on (a) fixed-effects methods, (b) a subsample of constantly employed individuals, and (c) lagged debt variables to rule out problems of reverse causality. We apply different measures of household indebtedness, such as the percentage shares of household income spent on consumer credit and home loan repayments (which indicate the severity of household indebtedness) and a binary variable of relative overindebtedness (which indicates a precarious debt situation). We find all debt measures to be strongly correlated with health satisfaction, mental health, and obesity. Controlling for unobserved heterogeneity and reversed causality we find evidence that household debt also causally deteriorates physical and mental health. However, there is no causal effect on being obese.
    Keywords: Debt; health satisfaction; mental health; obesity; fixed-effects
    JEL: D12 D14 I12
    Date: 2010
  2. By: Paolo Verme (University of Torine)
    Abstract: Do people care about income inequality and does income inequality affect subjective wellbeing? Welfare theories can predict either a positive or a negative impact of income inequality on subjective well-being and empirical research has found evidence on a positive, negative or non significant relation. This paper attempts to determine some of the possible causes of such empirical heterogeneity. Using a very large sample of world citizens we test the consistency of income inequality in predicting life satisfaction. We find that income inequality has a negative and significant effect on life satisfaction. This result is robust to changes of regressors and estimation choices and also persists across different income groups and across different types of countries. However, this relation is easily obscured or reversed by multicollinearity generated by the use of country and year fixed effects. This is particularly true if the number of data points for inequality is small, which is a common feature of cross-country or longitudinal studies.
    Keywords: Happiness, Inequality.
    JEL: D63 I31
    Date: 2010
  3. By: Leonardo Becchetti (University of Rome Tor Vergata); Stefano Castriota (University of Perugia); Elena Giachin (University of Rome 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: 2011
  4. By: Leonardo Becchetti (University of Rome Tor Vergata); Riccardo Massari (University of Rome La Sapienza); Paolo Naticchioni (Univ. of Cassino, Univ. of Rome La Sapienza, CeLEG (LUISS))
    Abstract: The paper focuses on happiness inequality, an issue rather neglected in the literature. We analyze the increase in happiness inequality observed in Germany between 1991 and 2007 by means of the German Socio-Economic Panel (GSOEP) database. We make use of a recent methodology that allows decomposing the change in happiness inequality into the composition and the coefficient effect for each covariate. We find that the increase in happiness inequality is mainly driven by changes in the composition of covariates, while coefficient effect is negligible, i.e., returns from happiness “fundamentals” are stable over time. Among composition effect, the rise in happiness inequality is explained –among others- by labour market conditions. Furthermore, the increase in education levels has an inequality-reducing impact on happiness. One clear cut policy implication of our paper is that policies enhancing education and labour market performance are crucial to reduce happiness inequality and the potential social tensions arising from it.
    Keywords: happiness inequality, education, income inequality, labour market performance.
    JEL: A13 I28 J17 J21 J28
    Date: 2010
  5. By: SARRACINO Francesco
    Keywords: subjective well-being; social capital; relational goods; Easterlin paradox; time-series; economic development; EVS; WVS
    JEL: D60 I31 O10
    Date: 2011–01
  6. By: Inder Ruprah (Inter-American Development Bank, Washington, DC, USA)
    Abstract: In this paper we present evidence that homeowners are happier than nonhomeowners and it is homeownership that causes the difference in happiness. The data used is for seventeen Latin American countries obtained from the LatinBarometer surveys. The association between homeownership and happiness is measured by an ordered logit regression with a comprehensive set of sociodemographic control variable with errors clustered at year and country. Happiness and ownership are positively and statistically significantly related. Causality is determined through nonparametric impact measure via the propensity score matching technique. Homeownership causes increased happiness. The impact result is robust to the problem of hidden bias. The impact conclusion also holds in a meta-impact approach where impacts are calculated for each country separately. Owning your home makes you happier, at least in Latin America.
    Keywords: Home Ownership, Happiness
    JEL: R30 I00
    Date: 2010–11

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