New Economics Papers
on Economics of Happiness
Issue of 2013‒02‒03
four papers chosen by

  1. Don't Worry, Be Happy? Happiness and Reemployment By Krause, Annabelle
  2. The Drivers of Happiness Inequality: Suggestions for Promoting Social Cohesion By Becchetti, Leonardo; Massari, Riccardo; Naticchioni, Paolo
  3. Is inclusive development a sustainable development? : A political economic perspective By Pushparaj, Soundararajan
  4. The Easterlin illusion: economic growth does go with greater happiness By Veenhoven, Ruut; Vergunst, Floris

  1. By: Krause, Annabelle (IZA)
    Abstract: Subjective well-being is primarily treated as an outcome variable in the economic literature. However, is happiness also a driver of behavior and life's outcomes? Rich survey data of recent entrants into unemployment in Germany show that a significant inverted U-shaped relationship exists between residual happiness and an unemployed individual's future reemployment probability and the reentry wage. Residual life satisfaction displays higher (or lower) satisfaction levels than would be predicted by a number of socioeconomic and demographic characteristics. This paper is the first to show that happiness is mainly a predictor for self-employment and less for standard reemployment. Related findings suggest that happiness matters for male unemployed, and the concept of locus of control is able to explain part of the effect. If reemployment and higher wages are considered desirable outcomes for the unemployed individual and society, the shape of the effect suggests an optimal level of happiness, which is not necessarily the highest.
    Keywords: unemployment, job search, happiness, reemployment, Germany
    JEL: J60 J64 I31
    Date: 2012–12
  2. By: Becchetti, Leonardo (University of Rome Tor Vergata); Massari, Riccardo (Sapienza University of Rome); Naticchioni, Paolo (University of Cassino)
    Abstract: This paper identifies and quantifies the contribution of a set of covariates in affecting levels and over time changes of happiness inequality. Using a decomposition methodology based on RIF regression, we analyse the increase in happiness inequality observed in Germany between 1992 and 2007, using the German Socio-Economic Panel (GSOEP) database, deriving the following findings. First, trends in happiness inequality are mainly driven by composition effects, while coefficient effects are negligible. Second, among composition effects, education has an inequality-reducing impact, while the increase in unemployment contributes to the rise in happiness inequality. Third, the increase in average income has a reducing impact on happiness inequality, while the raise in income inequality cannot be considered as a driver of happiness inequality trends. A clear cut policy implication is that policies enhancing education and economic performance contribute to reduce happiness inequality and the potential social tensions arising from it.
    Keywords: happiness inequality, income inequality, education, decomposition methods
    JEL: I31 I28 J17 J21 J28
    Date: 2013–01
  3. By: Pushparaj, Soundararajan
    Abstract: A major development policy challenge in the contemporary economic policy discourse is to sustain the development momentum. Prevailing political economic realities influence the economic thinking to accommodate the political compulsions. The inclusive development is one such development strategy. Inclusive development is not a mere political pragmatism but a sensible development strategy. This paper discusses the relevance of distributive justice in relation to civil disturbance across and within national boundaries in the context of sustainable development. This paper argues that the inclusive development guarantees the sustainable development. Further, argues for the revival of welfare state for sustainable development.
    Keywords: Sustainable Development; Inclusion; Inequality; Distributive Justice; Civil unrest
    JEL: D63 Q01 P16
    Date: 2013–01–23
  4. By: Veenhoven, Ruut; Vergunst, Floris
    Abstract: The 'Easterlin Paradox' holds that economic growth in nations does not buy greater happiness for the average citizen. This thesis was advanced in the 1970s on the basis of the then available data on happiness in nations. Later data have disproved most of the empirical claims behind the thesis, but Easterlin still maintains that there is no long-term correlation between economic growth and happiness. This last claim was tested using the time trend data available in the World Database of Happiness, which involve 1531 data points in 67 nations that yield 199 time-series ranging from 10 to more than 40 years. The analysis reveals a positive correlation between GDP growth and rise of in happiness in nations. Both GDP and happiness have gone up in most nations, and average happiness has risen more in nations where the economy has grown the most; r =+0.21 p< 05. On average a 1% growth in income per capita per year was followed by a rise in average happiness on scale 0-10 of 0.00335; thus a gain in happiness of a full point would take 60 years with an annual economic growth of 5%.
    Keywords: happiness; economic growth; Easterlin Paradox; trend analysis
    JEL: O10 I31 Z10 D60 A10 H00
    Date: 2013–01–23

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