New Economics Papers
on Economics of Happiness
Issue of 2013‒01‒12
three papers chosen by

  1. Dynamic Analysis and the Economics of Happiness: Rationale, Results and Rules By Piper, Alan T.
  2. A Happiness Test of Human Capital Theory By Piper, Alan T.
  3. An Assessment of Weighting Methodologies for Composite Indicators: The case of the Index of Economic Well-being By Andrew Sharpe; Brendon Andrews

  1. By: Piper, Alan T.
    Abstract: This paper provides a sustained introduction for the use of dynamic panel methods when analysing life satisfaction. As well as being able to address the issue of serial correlation, dynamic panel analysis also has the advantage of being able to treat variables as exogenous or endogenous, important for happiness, and can generate both contemporaneous and long run estimates for independent variables. A key result found initially for young people, but which is robust to different age ranges and countries, is that happiness is largely contemporaneous although there is a small, persistent effect of the past on current happiness. Additionally, decision rules are provided for the analysis of happiness using dynamic panel analysis.
    Keywords: Dynamic Panel Analysis; Happiness; Life Satisfaction
    JEL: I31 C33
    Date: 2012–06
  2. By: Piper, Alan T.
    Abstract: This paper tests whether there are wider considerations for undertaking than just income enhancements and improved working conditions. Hence, the investigation here is to ascertain whether there is a happiness premium to education over and above any human capital benefits? A novel feature of the paper is the extended methodological discussion which results from the finding of omitted dynamics. This complicates the analysis, and means that standard FE methods are not wholly appropriate. The discussion details the options available, and offers advice for happiness research where there are omitted dynamics. The empirical results are broadly supportive of human capital theory, and suggest a substantial ‘structural break’ regarding gender.
    Keywords: Education; Human Capital Theory; Life Satisfaction
    JEL: I31 I21 J24
    Date: 2012–12
  3. By: Andrew Sharpe; Brendon Andrews
    Abstract: The Index of Economic Well-Being (IEWB) – a composite indicator consisting of consumption, wealth, equality, and economic security – underwent several changes in the weighting of its components. For example, the final aggregation of the IEWB was changed to equal weighting after the IEWB was criticized for having a bias against sustainability; however, all weighting schemes have both advantages and shortcomings. To isolate the preferred ordinal ranking for the results, strong and weak dominance rules were established for countries across several observed weighting schemes, and each of these rules were ranked in all possible ways. An 'iterative dominance equilibrium' was computed for comparison to observed weighting schemes. Constrained data envelopment analysis (CDEA) performed best, yet CDEA is not ideal for comparisons across countries. Among explicit weights, the original weights of the IEWB were best. Although the original weights are supported, they were controversial – a shift to equal weights mitigated this controversial – it appears equal weights remain least objectionable.
    Date: 2013–01

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