nep-hap New Economics Papers
on Economics of Happiness
Issue of 2012‒08‒23
nine papers chosen by
Viviana Di Giovinazzo
University of Milano-Bicocca

  1. GINI DP 38: Inequality and Happiness: A Survey By Ada Ferrer-i-carbonell; Ramos, X. (Xavier)
  2. Reasons for nomeostatic failure in subjective wellbeing By Robert Tanton; Itismita Mohanty; Anthony Hogan
  3. NILS Working paper no 180. Job anxiety, work-related psychological illness and workplace performance By Jones, Melanie K.; Latreille, Paul L.; Sloane, Peter J.
  4. Does Money Buy Me Love? Testing Alternative Measures of National Wellbeing By Arthur Grimes; les Oxley; Nicholas Tarrant
  5. The ABC of Housing Strategies: Are Housing Assistance Programs Effective in Enhancing Children's Well Being? By Jose Rosero
  6. Life Satisfaction and Material Well-being of Children in the UK By Knies, Gundi
  7. Happy Talk: Mode of Administration Effects on Subjective Well-Being By Paul Dolan; Georgios Kavetsos
  8. Who is happier: Housewife or working wife? By Beja Jr, Edsel
  9. Do changes in the lives of our peers make us unhappy? By Tony Beatton; Paul Frijters

  1. By: Ada Ferrer-i-carbonell (Campus U.A.B., Institut d'Anàlisi Econòmica, IAE(CSIC)); Ramos, X. (Xavier)
    Abstract: In recent years there has been an accumulation of empirical evidence suggesting that individuals dislike inequality (Alesina and Giuliano, 2011 and Dawes et al., 2007). The literature has built upon estimating the degree of this dislike as well as its causes. The use of self-reported measures of satisfaction or well-being as a proxy for utility has been one of the empirical strategies used to this end. In this survey we review the papers that estimate or examine the relationship between inequality and self-reported happiness, and find that inequality reduces happiness in Western societies. The evidence for non-Western societies is more mixed and less reliable. Notwithstanding that, trust in the institutions seems to play an important role in shaping the relationship between income inequality and subjective wellbeing. We conclude with suggestions for further research.
    Date: 2012–05
  2. By: Robert Tanton (NATSEM, University of Canberra); Itismita Mohanty (NATSEM, University of Canberra); Anthony Hogan (Australian National University)
    Abstract: This paper presents initial results from work being done on the reasons that people experience homeostatic defeat in subjective wellbeing. Subjective wellbeing shows signs of homeostasis, meaning it always gravitates to one number (on average 75 on a scale of 1 to 100). The range around this average is also very small, suggesting that homeostasis is acting as a protective factor for wellbeing. Homeostatic defeat is when homeostasis stops operating as a protective factor in subjective wellbeing. Homeostatic defeat occurs after challenges to subjective wellbeing become too much for the homeostatic system to deal with. This paper derives a point of homeostatic failure using data from the HILDA survey, and then identifies the group of people who have experienced homeostatic failure from one wave to the next of HILDA. Changes in social capital and life events experienced by these people over these two waves are calculated. A logistic regression model is then used to identify which of these changes have a significant effect on homeostatic failure. We find that, after controlling for changes in social capital and health, only two major life events (birth of a child and separation) have an effect on homeostatic failure. The birth of a child is associated with a lower probability of homeostatic failure; and separation is associated with a higher probability. Worsening of health and a reduction in leisure time are also associated with a higher probability of homeostatic failure. Income was significantly associated with a lower probability of homeostatic failure, so it is a protective factor.
    Keywords: Wellbeing, homeostasis
    Date: 2012–07
  3. By: Jones, Melanie K.; Latreille, Paul L.; Sloane, Peter J.
    Abstract: This paper uses matched employee-employer data from the British Workplace Employment Relations Survey (WERS) 2004 to examine the determinants of employee job anxiety and work-related psychological illness. Job anxiety is found to be strongly related to the demands of the job as measured by factors such as occupation, education and hours of work. Average levels of employee job anxiety, in turn, are positively associated with work-related psychological illness among the workforce as reported by managers. The paper goes on to consider the relationship between psychological illness and workplace performance as measured by absence, turnover and labour productivity. Work-related psychological illness is found to be negatively associated with several measures of workplace performance.
    Keywords: Employment, Stress, Mental health, Absence, Productivity, Anxiety,
    Date: 2011
  4. By: Arthur Grimes (Motu Economic and Public Policy Research and University of Auckland); les Oxley (University of Waikato); Nicholas Tarrant
    Abstract: Many aggregate measures of wellbeing and sustainability exist to guide policy-makers. However, the power of these aggregate measures to predict objective wellbeing outcomes has received little comparative testing. We compile and compare a range of aggregate wellbeing measures including: material measures (e.g. Gross Domestic Product per capita), surveyed measures (e.g. life satisfaction) and composite measures (e.g. Human Development Index) covering a range of countries. We test the predictive power of wellbeing measures for an objective indicator of how people value countries’ relative attractiveness. The objective indicator is net migration over a fifty year timespan, indicating people’s revealed preference (re)location choices. The paper examines relationships amongst cross-country wellbeing and sustainability measures; and examines how New Zealand compares with other countries according to these measures. Based on models of spatial (dis)equilibrium and migration, we present tests of the predictive power of alternative aggregate measures for international migration outcomes. We find that both material and life satisfaction outcomes are important determinants of the choice to migrate.
    Keywords: aggregate wellbeing; life satisfaction; gross domestic product; migration
    JEL: A13 E01 J61 R23
    Date: 2012–08
  5. By: Jose Rosero (University of Amsterdam)
    Abstract: This paper examines the effect of a housing assistance program on school enrollment, child labor and poverty reduction among poor families in Ecuador. Administrative data is merged to a household panel to link the history of a voucher application with socioeconomic information. Two empirical approaches are employed. First, I exploit variation in duration of the different stages to obtain a voucher and convert it into a house, using a sample of approved applicants. Second, I use variation across siblings that arises from the fact that siblings are exposed to the program at different ages. Results show that the program improves enrollment into post-compulsory education, decreases the probability that a child participates in the labor market and reduces the likelihood to live in poverty. Potential mediating factors are increased access to sanitation, better quality materials of the house and a reduced probability to live overcrowded.
    Keywords: Housing assistance programs; Housing voucher; Children; Fixed Effects; Within family estimators; Developing country; Ecuador
    JEL: H53 I28 I38 R21
    Date: 2012–07–19
  6. By: Knies, Gundi
    Abstract: Life satisfaction is increasingly recognised as a desirable individual outcome. Policy attention with respect to child well-being has focused on improving the financial position of families with children. Using Understanding Society I show that child life satisfaction is not associated with household income (poverty), or with a set of new material deprivation measures of child poverty, introduced to help target effective policies that make a real difference to childrens lives. Those interested in maximizing societys welfare should shift their attention from an emphasis on increasing consumption opportunities for families with children to an emphasis on increasing social contacts.
    Date: 2012–08–02
  7. By: Paul Dolan; Georgios Kavetsos
    Abstract: Research on the measurement of subjective well-being (SWB) has escalated in recent years. This study contributes to the literature by examining how SWB reports differ by mode of survey administration. Using data from the 2011 Annual Population Survey in the UK, we find that individuals consistently report higher SWB over the phone compared to face-to-face interviews. We also show that the determinants of SWB differ significantly by survey mode. We must therefore account for mode of administration effects in research into SWB and its determinants.
    Keywords: subjective well-being, happiness, survey mode
    JEL: D60 I3
    Date: 2012–07
  8. By: Beja Jr, Edsel
    Abstract: Earlier research found no difference in the happiness between a housewife and a working wife. However, there now is the expectation that a difference in their happiness exists today given the increase in the labor participation of women over the years. This paper revisits the debate using data from the 2000s. For the upper- and low-income economies, there is still no difference in the happiness between a housewife and a working wife. In contrast, results for the middle-income economies clearly show that a part-time working wife is happier than a housewife and that both part-time working wife and housewife are happier than a full-time working wife.
    Keywords: Housewife; working wife; happiness; life satisfaction
    JEL: I31 Z13 J12 D60 J20 B54 C80
    Date: 2012–08–05
  9. By: Tony Beatton (QUT); Paul Frijters (UQ)
    Abstract: In this paper, we seek to explain the changes in aggregate happiness over the lifecycle. The advantage of looking at the aggregate level of happiness is that it solves the problems of missing peer effects and measurement error that plague models of individual level happiness, though the disadvantage is a dramatic loss of degrees of freedom. We use panel data from the Household Income and Labour Dynamics for Australia (HILDA), which allows us to construct an index of the severity of life changes for each age. This single-variable Stress Index is able to explain over 80% of the variation in happiness over time. Unexpectedly, aggregate ‘positive stress’ (such as marriage rates by age or levels of job promotion) have greater negative effects on aggregate life satisfaction than negative stress (such as negative financial events or deaths of spouses), which we interpret as a strong indication that what is deemed a positive event by the person involved is a highly negative event for his or her peers. We find some evidence that extraverted individuals get affected less negatively by stress. The happiness maximising policy is then to reduce changes over the life cycle to the bare minimum needed to sustain a dynamic economy and to sustain procreation.
    Keywords: Happiness methodology, life satisfaction, endogenous, models, age effects, personality effects, stress, change, life shocks, variables, aggregate, time series
    JEL: C23 C25 I31
    Date: 2012–08–09

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