nep-hap New Economics Papers
on Economics of Happiness
Issue of 2011‒02‒05
eleven papers chosen by
Viviana Di Giovinazzo
University of Milano-Bicocca

  1. The Effects of the Financial Crisis on the Well-Being of Older Americans: Evidence from the Cognitive Economics Study By Matthew D. Shapiro
  2. To Give or Not To Give? Equity, Efficiency and Altruistic Behavior in a Survey-Based Experiment By Vittorio Pelligra; Luca Stanca
  3. Education and Household Welfare in Sri Lanka from 1985 to 2006 By Rozana Himaz; Harsha Aturupane
  4. Beyond GDP and Back: What is the Value-Added by Additional Components of Welfare Measurement? By Kassenböhmer, Sonja C.; Schmidt, Christoph M.
  5. An Assessment of How Urban Crime and Victimization Affects Life Satisfaction By Carlos Medina; Jorge Andrés Tamayo
  6. Homemaking and women's well-being in Europe. Effect of divorce risk, selection and dominating gender-role attitudes By MIKUCKA Malgorzata
  7. Do we need social cohesion to be happy? By KLEIN Carlo
  8. Satisfaction in life conditions and well-being By DICKES Paul; KLEIN Carlo
  9. Aversion to Extreme Temperatures, Climate Change, and Quality of Life By David Albouy; Walter Graf; Ryan Kellogg; Hendrik Wolff
  10. Classification, Detection and Consequences of Data Error: Evidence from the Human Development Index By Hendrik Wolff; Howard Chong; Maximilian Auffhammer
  11. Geographic Dispersion and the Well-Being of the Elderly By Suzanne Bianchi; Kathleen McGarry; Judith Seltzer

  1. By: Matthew D. Shapiro (University of Michigan and NBER)
    Abstract: This paper uses the Cognitive Economics Study (CogEcon) to assess the effect of the financial crisis on the well-being of older Americans. Financial wealth fell by about 15 percent for the median household. These financial losses were concentrated among households with high levels of wealth and high cognitive capacities, who tend to have higher exposure to the stock market. Nonetheless, households with little financial wealth suffered declines in well-being-measured by declines in consumption-as large on average as households with substantial exposure to the stock market. Tight credit market conditions and adverse labor market outcomes account for much of the effect of the financial crisis on the consumption of these low-wealth households.
    Date: 2010–09
  2. By: Vittorio Pelligra; Luca Stanca
    Abstract: This paper presents the results of a survey-based experiment on the role of equity and efficiency for altruistic behavior. Using simple binary decisions for a representative pool of subjects, we find that both equity and efficiency are relevant for the decision to give. However, contrary to the findings in several laboratory experiments, our results indicate that equity plays a major role for altruistic behavior. Differ- ences in relative payoffs have a significant effect on the decision to give. When giving is not costly, more than half of the subjects prefer equal payoffs to a socially efficient but unequal allocation. When giving is Pareto-improving, half the subjects choose to sacrifice a higher payoff in order to avoid payoff inequality. We also find that preferences, as revealed by experimental choices, are largely consistent with re- ported pro-social activities, while only weakly related to self-reported well-being.
    Keywords: Altruism, Inequality-Aversion, SocialWelfare, Envy, Large-Scale Experiment
    JEL: D63 C78 C91
    Date: 2010–12
  3. By: Rozana Himaz; Harsha Aturupane
    Abstract: This paper looks at the impact of education on household economic welfare in Sri Lanka over twenty years from 1985 to 2006 using five cross section household survey datasets. Applying quantile regression techniques the analysis finds that the incremental value to household welfare shows a distinct jump for an extra year of education at levels where important national examinations are completed. Moreover, higher quantiles systematically enjoy greater incremental welfare to education levels between Grade 8 to completed Advanced level examinations. Both these effects happen partly via the labour market, as labour market returns to employment display similar trends. The first finding suggests that credentials are important in the labour market. The second finding suggests that individuals in the upper quantiles probably have better quality education as well as social and analytical skills that complement formal education, enabling them to earn higher returns for their education.
    Keywords: Sri Lanka, education, welfare, quantile regression, returns
    JEL: I00 I20 I21 O53
    Date: 2011
  4. By: Kassenböhmer, Sonja C. (RWI); Schmidt, Christoph M. (RWI)
    Abstract: Recently, building on the highly polarizing Stiglitz report, a growing literature suggests that statistical offices and applied researchers explore other aspects of human welfare apart from material well-being, such as job security, crime, health, environmental factors and subjective perceptions. To explore the additional information of these indicators, we analyze data on the macro level from the German Federal Statistical Office combined with micro level data from the German SOEP (1991-2008) on the personal work situation and subjective feelings concerning several aspects of life. Employing the indicators suggested by the Stiglitz Report, we find that much of the variation in many well-being measures can indeed be captured well by the hard economic indicators as used in the literature, especially by GDP and the unemployment rate. This suggests that the hard indicators are still a reasonable and quite robust gauge of well-being of a country. And yet, we also see that these correlations are far from perfect, thus giving considerable hope that there is room for a broader statistical reporting.
    Keywords: Stiglitz Commission, Stiglitz Report, Beyond GDP, welfare measurement, life satisfaction
    JEL: D6 I3 E01
    Date: 2011–01
  5. By: Carlos Medina; Jorge Andrés Tamayo
    Abstract: We assess the effect of the homicide rate, individual´s perception of security in their neighborhood of residence, and of the effect of their having been victimized, on life satisfaction. We find a negative effect of the homicide rate on life satisfaction for the subsample of individuals living in their current houses for at least 10 years or more, who had moved to that place at some point in the past. We also find a positive and robust effect of the perception of security in the households´neighborhood for the whole sample, and for different subsamples considered. Having been victim of an offense is also robustly negatively related to life satisfaction, in particular in the cases where the offense was robbery.
    Date: 2011–01–25
  6. By: MIKUCKA Malgorzata
    Abstract: Whereas it is known that employment affects individual well-being, the literature on the effect of homemaking is so far inconclusive. The paper investigates the effect of being a housewife on well-being of women, using European Values Study data for 36 European countries (year 2008) and multilevel regression methodology. Results show that the effect of homemaking on well-being is overall positive and it varies across countries. Three possible explanations of this variation are examined. First hypothesis concerns traditional gender-role attitudes in a country. Results confirm that in more traditional countries homemakers have higher wellbeing, but only in western Europe. Effect of individual norms is strong: housewives with traditional gender-role attitudes declare higher well-being. Second hypothesis refers to the economic risk of specialization to homemaking, and states that higher divorce risk decreases well-being of housewives. Contrary to expectations, higher divorce risk in a country is accompanied by higher well-being of housewives. I interpret this as a sign of equality concerns incorporated into legal divorce procedures. Third hypothesis concerns positive and negative selection to homemaking. Results show that the relationship between prevalence of homemaking and the well-being of housewives is curvilinear. Highest well-being gains from homemaking occur in countries with lowest and highest prevalence of homemaking.
    Keywords: well-being; homemaking; housewife; women's employment
    Date: 2011–01
  7. By: KLEIN Carlo
    Abstract: We consider in a first step, that social cohesion will be a determinant of income and, in a second step, income will be a determinant of subjective well-being (SWB) along with social cohesion. We propose to use the weighted Three-Stage Least Squares (3SLS) method to estimate our two steps model, based on EVS wave 2008 data for Luxembourg. The impact of social cohesion on SWB is confirmed by the effect of the socio-cultural domain of social cohesion on SWB. The formal character of the political domain, has a positive impact on SWB. Considering the economic aspect of social cohesion we conclude that this domain should be included in any further research studying the relationship between social cohesion and SWB. Nous considérons dans une première étape que la cohésion sociale sera un déterminant du revenu individuel et dans une deuxième étape que le revenu individuel sera un déterminant du bien-être subjectif à côté de la cohésion sociale. Nous proposons d?estimer ce modèle en appliquant la méthode « des triples moindres carrés pondérés (3SLS) » aux données EVS 2008 pour le Luxembourg. L?impact de la cohésion sociale sur le bien-être subjectif est confirmé par l?effet du domaine socio-culturel de la cohésion sociale sur le bien-être subjectif. De même, le caractère formel du domaine politique de la cohésion sociale a un effet positif sur le bien-être subjectif. En considérant l?aspect économique de la cohésion sociale, nous concluons que ce domaine devrait être inclus dans toute recherche future concernant la relation entre cohésion sociale et bien-être subjectif.
    Keywords: subjective well-being; social cohesion; European Value study wave 2008 Luxembourg
    JEL: A10 D60 I30
    Date: 2011–01
  8. By: DICKES Paul; KLEIN Carlo
    Abstract: In this note we focus on the relations between analytical life satisfaction measures and a general well-being indicator, measured by the two general subjective well-being (SWB) questions. A global SWB factor, measured by the single happiness and by the general life satisfaction questions, is explained through regression of first order factors on the questionnaire of satisfaction in the life domains. The research is based on the 2008 wave of the European Value Study (EVS) for Luxembourg. The validity of the personal living conditions as a measure of general well-being has been assessed by a MIMIC-model. Therefore, satisfaction in personal affairs indicators can constitute an enrichment of general well-being measures.
    Keywords: subjective well-being; Mimic-model; EVS wave 2008 Luxembourg
    JEL: C00 D60
    Date: 2011–01
  9. By: David Albouy; Walter Graf; Ryan Kellogg; Hendrik Wolff
    Date: 2010–02
  10. By: Hendrik Wolff (University of Washington); Howard Chong (University of California, Berkeley); Maximilian Auffhammer (University of California, Berkeley)
    Abstract: We measure and examine data error in health, education and income statistics used to construct the Human Development Index. We identify three sources of data error which are due to (i) data updating, (ii) formula revisions and (iii) thresholds to classify a country’s development status. We propose a simple statistical framework to calculate country specific measures of data uncertainty and investigate how data error biases rank assignments. We find that up to 34% of countries are misclassified and, by replicating prior studies, we show that key estimated parameters vary by up to 100% due to data error.
    Date: 2011–01
  11. By: Suzanne Bianchi (University of California, Los Angeles); Kathleen McGarry (University of California, Los Angeles and NBER); Judith Seltzer (University of California, Los Angeles)
    Abstract: Perhaps the largest problem confronting our aging population is the rising cost of health care, particularly the costs borne by Medicare and Medicaid. A chief component of this expense is long-term care. Much of this care for an unmarried (mostly widowed) mother is currently provided by adult children. The provision of family care depends importantly on the geographic dispersion of family members. In this study we provide preliminary evidence on the geographic dispersion of adult children and their older unmarried mother. Coresidence is less likely for married adult children, those who are parents and the highly educated and more likely for those who are not working or only employed part time and for black and Hispanic adult children. Close proximity is more common for married children who are parents but less common for the highly educated. When we look at transitions between one wave of data collection and the next (a 2-year interval), about half of adult children live more than 10 miles away at both points, a little less than one quarter live within 10 miles at both points, and 8 percent are coresident at both points in time. Among the 17 percent who make a transition, about half of the changes result in greater distance between the adult child and mother and half bring them into closer proximity. The needs of both generations are likely reflected in these transitions. In fact, a mother’s health is not strongly related to most transitions and if anything, distance tends to be greater for older mothers relative to those mothers in their early 50s.
    Date: 2010–10

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