New Economics Papers
on Economics of Happiness
Issue of 2012‒07‒01
three papers chosen by

  1. Life Satisfaction, Household Income and Personality Theory By Eugenio Proto; Aldo Rustichini
  2. Boats and tides and "Trickle Down" theories: What economists presume about wellbeing when they employ stochastic process theory in modeling behavior By Anderson, Gordon
  3. Human Capital, Matching and Job Satisfaction By Tim Barmby; Alex Bryson; Barbara Eberth

  1. By: Eugenio Proto; Aldo Rustichini
    Abstract: We show that personality traits mediate the e ect of income on Life Satisfaction. The e ect is strong in the case of Neuroticism, which measures the sensitivity to threat and punishment, in both the British Household Panel Survey and the German Socioeconomic Panel. Neuroticism increases the usually observed concavity of the relationship: Individuals with higher Neuroticism score enjoy income more than those with lower score if they are poorer and enjoy income less if they are richer. When the interaction between income and neuroticism is introduced, income does not have signi cant e ect on his own. To interpret the results, we present a simple model where we assume that (i) Life Satisfaction is dependent from the gap between aspired and realized income, and this is modulated by Neuroticism and (ii) income increases in aspirations with a slope less than unity, so that the gap between aspired and realized income increase with aspirations. From the estimation of this model we argue that poorer tend to overshoot in their aspiration, while rich tend to under-shoot. The estimation of the model also shows substantial effect of traits on income.
    Keywords: Life satisfaction, household income, personality theory, neuroticism
    JEL: D03 D87 C33
    Date: 2012
  2. By: Anderson, Gordon
    Abstract: Aphorisms that "Rising tides raise all boats" or that material advances of the rich eventually "Trickle Down" to the poor are really maxims regarding the nature of stochastic processes that underlay the income/wellbeing paths of groups of individuals. This paper looks at the implications for the empirical analysis of wellbeing of conventional assumptions regarding such processes which are employed by both micro and macro economists in modeling economic behavior. The implications of attributing different processes to different groups in society following the club convergence literature are also discussed. Various forms of poverty, inequality, polarization and income mobility structures are considered and much of the conventional wisdom afforded us by such aphorisms is questioned. To exemplify these ideas the results are applied to the distribution of GDP per capita in the continent of Africa. --
    Keywords: Stochastic processes,poverty,inequality,wellbeing measurement
    JEL: C22 D63 D91 I32 O47
    Date: 2012
  3. By: Tim Barmby; Alex Bryson; Barbara Eberth
    Abstract: Using a model of wage determination developed by Stevens (2003) we offer an explanation of why tenure has a negative effect when entered in job satisfaction equations. If job satisfaction measures match quality, then the explanation follows from a model of the labour market in which workers accumulate specific human capital at the firm they work and the way in which this accumulation affects the way workers react to outside job opportunities.
    Keywords: Job satisfaction, job match quality, human capital, job tenure
    JEL: J24 J28
    Date: 2012–06

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