New Economics Papers
on Economics of Happiness
Issue of 2013‒04‒27
four papers chosen by

  1. Does integration increase life satisfaction? By Koczan, Zs
  2. Direct Evidence on Income Comparisons and Subjective Well-Being By Laszlo Goerke; Markus Pannenberg
  3. Climate Amenities, Climate Change, and American Quality of Life By Albouy, David; Graf, Walter; Kellogg, Ryan; Wolff, Hendrik
  4. Nominal or Real? The Impact of Regional Price Levels on Satisfaction with Life By Deckers, Thomas; Falk, Armin; Schildberg-Hörisch, Hannah

  1. By: Koczan, Zs
    Abstract: In recent years there has been increasing interest in measuring subjective well-being in economics; most of the literature on immigrants has however continued to focus on `objective' measures of integration such as employment and education outcomes. This paper aims to complement these studies by analysing the life satisfaction of immigrants once settled in the host country, examining which elements of integration matter for life satisfaction. We find that in terms of simple averages immigrants appear to be less satisfied than natives. However, contrary to the results of some recent papers, this difference can be explained by factors related to economic integration, such as the details of their employment conditions, rather than cultural factors such as feelings of not belonging, which often loom large in the public mind. Also segregation does not affect their life satisfaction per se. While having host country citizenship appears to have a large, significant positive effect in a simple pooled ordinary least squares specification, exploiting a natural experiment of changes in the citizenship law in the host country we find that this is driven by a selection effect rather than an increase in life satisfaction due to obtaining citizenship.
    Keywords: Integration, subjective well-being, segregation, citizenship law
    JEL: J15 O15
    Date: 2013–04–19
  2. By: Laszlo Goerke; Markus Pannenberg
    Abstract: Subjective well-being (SWB) is generally argued to rise with relative income. However, direct evidence is scarce on whether and how intensively individuals undertake income comparisons, to whom they relate, and what they perceive their relative income to be. In this paper, novel data with direct information on income comparison intensity and perceived relative income with respect to predetermined reference groups is used to provide evidence on the relationship between income comparisons and SWB. We find negative correlations between comparison intensity and SWB for co-workers, people in the same occupation and friends. For job-related reference groups income comparisons are mostly upwards and perceiving to earn less than the reference group is negatively correlated with SWB.
    Keywords: Income comparisons, endogenous reference groups, German Socio-Economic Panel (SOEP), subjective well-being
    JEL: D31 D62 I31
    Date: 2013
  3. By: Albouy, David (University of Michigan); Graf, Walter (University of California, Berkeley); Kellogg, Ryan (University of Michigan); Wolff, Hendrik (University of Washington)
    Abstract: We present a hedonic framework to estimate U.S. households' preferences over local climates, using detailed weather and 2000 Census data. We find that Americans favor an average daily temperature of 65 degrees Fahrenheit, will pay more on the margin to avoid excess heat than cold, and are not substantially more averse to extremes than to temperatures that are merely uncomfortable. These preferences vary by location due to sorting or adaptation. Changes in climate amenities under business-as-usual predictions imply annual welfare losses of 1 to 3 percent of income by 2100, holding technology and preferences constant.
    Keywords: climate amenities, climate change, quality of life, temperature profiles, heterogeneous preferences
    JEL: H49 I39 Q54 R10
    Date: 2013–04
  4. By: Deckers, Thomas (University of Bonn); Falk, Armin (University of Bonn); Schildberg-Hörisch, Hannah (University of Bonn)
    Abstract: We study the effect of real versus nominal income on life satisfaction. According to economic theory real income, i.e., nominal income adjusted for purchasing power, should be the relevant source of life satisfaction. Previous work, however, has only studied the impact of nominal income. We use a novel data set comprising about 7 million data points that are used to construct a price level for each of the about 400 administrative districts in Germany. We estimate a fixed effects model that controls for individual and local heterogeneity other than the price level. Our results show that higher price levels significantly reduce life satisfaction for individuals in the four lowest deciles of the income distribution. Furthermore, our findings suggest that people do not perceive money as neutral: the loss in life satisfaction caused by a higher price level is much larger than the loss in life satisfaction induced by a corresponding decrease in nominal income. Our results provide an argument in favor of regional indexation of government transfer payments such as social welfare benefits.
    Keywords: life satisfaction, price index, neutrality of money, redistribution
    JEL: D60 C23 D31
    Date: 2013–04

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