nep-hap New Economics Papers
on Economics of Happiness
Issue of 2011‒07‒02
three papers chosen by
Viviana Di Giovinazzo
University of Milano-Bicocca

  1. The Happiness-Income Paradox Revisited By Easterlin, Richard A.; Angelescu McVey, Laura; Switek, Malgorzata; Sawangfa, Onnicha; Zweig, Jacqueline Smith
  2. Social capital dynamics and collective action: the role of subjective satisfaction By Leonardo Becchetti; Stefano Castriota; Pierluigi Conzo
  3. Are Americans Really Less Happy With Their Incomes? By Arie Kapteyn; James P. Smith; Arthur van Soest

  1. By: Easterlin, Richard A. (University of Southern California); Angelescu McVey, Laura (University of Southern California); Switek, Malgorzata (University of Southern California); Sawangfa, Onnicha (University of Southern California); Zweig, Jacqueline Smith (University of Southern California)
    Abstract: The striking thing about the happiness-income paradox is that over the long-term – usually a period of 10 y or more – happiness does not increase as a country's income rises. Heretofore the evidence for this was limited to developed countries. This article presents evidence that the long term nil relationship between happiness and income holds also for a number of developing countries, the eastern European countries transitioning from socialism to capitalism, and an even wider sample of developed countries than previously studied. It also finds that in the short-term in all three groups of countries, happiness and income go together, i.e., happiness tends to fall in economic contractions and rise in expansions. Recent critiques of the paradox, claiming the time series relationship between happiness and income is positive, are the result either of a statistical artifact or a confusion of the short-term relationship with the long-term one.
    Keywords: Easterlin Paradox, life satisfaction, subjective well-being
    JEL: I31 O10 O5 D60
    Date: 2011–06
  2. By: Leonardo Becchetti (Department of Economics, Universitˆ Tor Vergata); Stefano Castriota (Department of Economics, Universitˆ di Perugia); Pierluigi Conzo (Università di Roma Tor Vergata & EIEF)
    Abstract: In low income countries grass-root collective action is a well known substitute for government provision of public goods. In our research we wonder what is its effect on the law of motion of social capital, a crucial microeconomic determinant of economic development. To this purpose we structure a ?sandwich? experiment in which participants play a public good game (PGG) between two trust games (TG1 and TG2). Our findings show that the change in trustworthiness between the two trust game rounds generated by the PGG treatment is crucially affected by the subjective satisfaction about the PGG rather than by standard objective measures related to PGG players? behavior. These results highlight that subjective satisfaction after collective action has relevant predictive power on social capital creation providing information which can be crucial to design successful self-organized resource regimes.
    Keywords: trust games, public good games, randomized experiment, social capital, subjective wellbeing
    JEL: O12 C93 Z13
    Date: 2011–06
  3. By: Arie Kapteyn; James P. Smith; Arthur van Soest
    Abstract: Recent economic research on international comparisons of subjective well-being suffers from several important biases due to the potential incomparability of response scales within and across countries. In this paper the authors concentrate on self-reported satisfaction with income in two countries: The Netherlands and the U.S. The comparability problem is addressed by using anchoring vignettes. They find that in the raw data, Americans appear decidedly less satisfied with their income than the Dutch. It turns out however that after response scale adjustment based on vignettes the distribution of satisfaction in the two countries is essentially identical. In addition, they find that the within-country cross-sectional effect of income on satisfaction- a key parameter in the recent debate in the economic literature- is significantly under-estimated especially in the US- when differences in response scales are not taken into account.
    Keywords: happiness, life satisfaction, vignettes, reporting bias
    JEL: I30 J30
    Date: 2011–05

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