nep-hap New Economics Papers
on Economics of Happiness
Issue of 2013‒06‒16
seven papers chosen by
Viviana Di Giovinazzo
University of Milano-Bicocca

  1. Mapping out social worlds by states of mind in Europe By Dumitru Sandu
  2. Nominal or Real? The Impact of Regional Price Levels on Satisfaction with Life By Thomas Deckers; Armin Falk; Hannah Schildberg-Hörisch
  3. Getting the Most out of Giving: Pursuing Concretely-Framed Prosocial Goals Maximizes Happiness By Rudd, Melanie; Aaker, Jennifer; Norton, Michael I.
  4. Rhythms and Cycles in Happiness By Wolfgang Maennig; Malte Steenbeck; Markus Wilhelm
  5. Third Person Effects in Interview Responses on Life Satisfaction By Adrian Chadi
  6. Life satisfaction and education in South Africa: Investigating the role of attainment and the likelihood of education as a positional good By Ferdi Botha
  7. Cross-country heterogeneity and endogeneity bias in life satisfaction estimations - Macro- and micro-level evidence for advanced, developing and transition countries By Krenz, Astrid

  1. By: Dumitru Sandu
    Abstract: The study explores the social diversity of Europe from the perspective of life-spaces with high profile configurations of states of mind. “Social worlds” as groups with standardised modes of acting, thinking and evaluation are identified beyond formal borders. This study tested the hypothesis of the existence of similarities in states of mind (measured in terms of satisfaction with life, optimism, perception of labour market in the country and institutional trust) as a function of age category (young adult, middle-aged adult and aged), residential environment (rural, urban) and the sociocultural macroregion. The testing of research hypotheses is performed by means of a multilevel analysis of the Eurobarometer 70 data collected at an EU level in the autumn of 2008. The approach is in line with quantitative grounded theory (Glaser 2008).
    Keywords: social worlds, states of mind, European regions
    JEL: A13 J28 Z13
    Date: 2013–06–04
  2. By: Thomas Deckers; Armin Falk; Hannah Schildberg-Hörisch
    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
  3. By: Rudd, Melanie (Stanford University); Aaker, Jennifer (Stanford University); Norton, Michael I. (Harvard University)
    Abstract: Across six field and laboratory experiments, participants given a concretely-framed prosocial goal (e.g., making someone smile, increasing recycling) felt happier after performing a goal-directed act of kindness than did those who were assigned a functionally similar, but more abstractly-framed, prosocial goal (e.g., making someone happy, saving the environment). This effect was driven by differences in the size of the gap between participants' expectations and reality: Compared to those assigned to pursue an abstractly-framed prosocial goal, those assigned to pursue a concretely-framed goal perceived that the actual outcome of their goal-directed efforts more accurately matched their expectations, causing them to experience a greater boost in personal happiness. Further, participants were unable to predict this effect, believing that pursuing abstractly-framed prosocial goals would have either an equal or greater positive impact on their own happiness.
    Date: 2013–04
  4. By: Wolfgang Maennig (Chair for Economic Policy, University of Hamburg); Malte Steenbeck (Chair for Economic Policy, University of Hamburg); Markus Wilhelm (Chair for Economic Policy, University of Hamburg)
    Abstract: This study analyses time-dependent rhythms in happiness in three aspects. We show that the Sunday neurosis exists exclusively for men with a medium level of education and both men and women with high levels of education. Men with high levels of education may even experience a weekend neurosis. This study is the first to test for intra-monthly rhythms and to demonstrate that men with a lower educational background may suffer from negative effects on happiness towards the end of the month, potentially due to liquidity problems. The study is also the first to demonstrate that – even when controlling for health and income effects – happiness exhibits seasonal effects over the annual period, depending on gender and education.
    Keywords: Happiness; life satisfaction; weekend neurosis; rhythms in time
    JEL: I31 N70 Q48
    Date: 2013–06–07
  5. By: Adrian Chadi (Institute for Labour Law and Industrial Relations in the EU, University of Trier)
    Abstract: This paper investigates the finding that reported life satisfaction scores are significantly higher in the German Socio-Economic Panel when a third person is present during the interview. Even after controlling a variety of relevant factors, third person presence makes up a significant difference in satisfaction levels. A plausible explanation is that interviewees distort their responses in a favourable way. The evidence suggests that this apparently minor aspect could even affect empirical outcomes in happiness research. This study contributes to the literature in this field, especially with respect to the recently revived debate on survey methodology in the reporting of satisfaction.
    Keywords: Well-being, Survey design, Interview-specific factor, Third persons, Response bias
    JEL: C8 D6 I3
    Date: 2013–05
  6. By: Ferdi Botha
    Abstract: This paper explores various dynamics in the relationship between life satisfaction and education in South Africa using the 2008 National Income Dynamics Survey. The results indicate a strong positive association between educational attainment and individual satisfaction with life, which is true in the overall sample and for men and women. This positive relationship also holds for Black and Coloured individuals, but is insignificant in the Asian and White samples. Evidence indicates that education is a positional good, in that people who have attained more than the mean level of education in their relevant cluster are significantly more satisfied with life compared to those possessing less than the mean education.
    Keywords: subjective wellbeing, positional concerns, Education, South Africa
    JEL: I2 Z13
    Date: 2013
  7. By: Krenz, Astrid
    Abstract: The past literature found evidence for the presence of endogeneity issues due to individuals' heterogeneity and omitted time-varying variables in the relationship between income and life satisfaction on the micro-level for the UK (Powdthavee (2010)). The aim of the present contribution is to put these results in a broader context and to investigate the role of cross-country heterogeneity and income endogeneity in estimations on life satisfaction for sub-samples of advanced, developing and transition countries. The paper is innovative in merging this methodology with a multi-country setting, particularly considering transition and developing countries. Instrumenting for income, we find that cross-country heterogeneity is associated with a significantly lower estimate for the income effect, whereas controlling for endogeneity bias delivers significantly higher estimates. This points to a negative bias in the OLS estimate, and thus approves previous literature's findings. Capturing endogeneity appears to be essential in studies on life satisfaction. The negative bias apparently is highest for the sub-sample of transition countries and lowest for advanced countries. Most of the macro- and micro-level impacts are in line with the previous literature. --
    Keywords: life satisfaction,income,endogeneity
    JEL: I31 O57
    Date: 2013

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