nep-hap New Economics Papers
on Economics of Happiness
Issue of 2013‒07‒15
seven papers chosen by
Viviana Di Giovinazzo
University of Milano-Bicocca

  1. Estimating the cost of air pollution in South East Queensland: An application of the life satisfaction non-market valuation approach By Ambrey, Christopher L.; Chan, Andrew Yiu-Chung; Fleming, Christopher M.
  2. Survey Design and Response Analysis: a Study on Happiness, Life Satisfaction and Well-being in Piedmont, a Region of Italy. By Anna Maffioletti; Agata Maida; Francesco Scacciati
  3. Economic Consequences of Mispredicting Utility By Bruno S. Frey; Alois Stutzer
  4. Material and Non-material Determinants of European Youth's Life Quality By Gawlik, Remigiusz
  5. Walking Wounded – The Causal Welfare Loss of Underemployment through Overeducation By John P. Haisken-DeNew; Jan Kleibrink
  6. Testing the Tunnel Effect: Comparison, Age and Happiness in UK and German Panels By Felix FitzRoy; Michael Nolan; Max Steinhardt; David Ulph
  7. Testing the Easterlin hypothesis with panel data: The dynamic relationship between life satisfaction and economic growth in Germany and in the UK By Pfaff, Tobias; Hirata, Johannes

  1. By: Ambrey, Christopher L.; Chan, Andrew Yiu-Chung; Fleming, Christopher M.
    Abstract: Making use of data from the Household, Income and Labour Dynamics in Australia (HILDA) survey coupled with air pollution data generated by The Air Pollution Model (TAPM), this paper employs the life satisfaction approach to estimate the cost of air pollution from human activities in South East Queensland. This paper offers at least three improvements over much of the existing literature: (1) within- (as opposed to cross-) country variations in air pollution are considered; (2) very high resolution air pollution data is employed; and (3) weather variables are included as controls within the life satisfaction function. A strong negative relationship is found between ambient concentrations of PM10 and life satisfaction, yielding a substantial willingness-to-pay for pollution reduction.
    Keywords: Air Pollution, Happiness, Household, Income and Labour Dynamics in Australia (HILDA), Geographic Information Systems (GIS), Life Satisfaction, Consumer/Household Economics, Environmental Economics and Policy, International Relations/Trade, Labor and Human Capital,
    Date: 2013–02
  2. By: Anna Maffioletti; Agata Maida; Francesco Scacciati
    Abstract: In the literature of happiness economics individual subjective utility is measured by directly asking individuals to self-assess their level of utility, usually on a numerical scale, using various terms such as happiness, life satisfaction and well-being, most of the times taking for granted that they are synonymous. Despite the richness of happiness economics literature, several terminological and methodological issues still need to be investigated. This paper presents the results of a field survey conducted in the Region of Piedmont (Northern Italy) by means of 1250 face-to-face interviews, financed by Piedmont Government, in order to assess the level of happiness, life satisfaction and quality of life using three different scales: a verbal one (7 steps from, say, very unhappy to very happy, a unipolar cardinal scale (from 1 to 7) and bipolar cardinal scale (from -3 to 3). We have also examined the effects of wording and scales on those that turned out to be the main determinants of the three notions. We show that wording clearly matters: not only each subject (in most cases) self-reports differently her/his own happiness, life satisfaction and well-being and therefore they may be similar but not equivalent notions, but also their determinants turn out to be different. Moreover, we find that the use of different scales leads to different results. However, a clear pattern does not emerge: therefore we cannot state which numerical scale performs better in representing the verbal self-reported valuations.
    Keywords: Happiness, Satisfaction, Well-Being, Survey Design
    JEL: B21 B41 C83 D03 J28
    Date: 2013
  3. By: Bruno S. Frey; Alois Stutzer
    Abstract: In a simple conceptual framework, we organize a multitude of phenomena related to the (mis)prediction of utility. Consequences in terms of distorted choices and lower wellbeing emerge if people have to trade-off between alternatives that are characterized by attributes satisfying extrinsic desires and alternatives serving intrinsic needs. Thereby the neglect of asymmetries in adaptation is proposed as an important driver. The theoretical analysis is consistent with econometric evidence on commuting choice using data on subjective wellbeing. People show substantial adaptation to a higher labor income but not to commuting. This may account for the finding that people are not compensated for the burden of commuting.
    Keywords: Adaptation, extrinsic/intrinsic attributes, individual decision-making, misprediction, subjective well-being, time allocation
    JEL: A12 D11 D12 D84 I31 J22
    Date: 2013
  4. By: Gawlik, Remigiusz
    Abstract: The paper confronts chosen approaches to quality of life studies with recent changes in post-crisis socio-economic environment. The focus is on European Youth at verge of entry into adult life. Presented research is a preliminary study for “The Application of Artificial Intelligence Methods for Analyzing Material and Non-material Determinants of Life Satisfaction between Young People from Developing Countries” project. Identifying and grouping the determinants of their life satisfaction could result in elaborating an innovative approach, providing European Youth with a new perspective on their personal and professional development options and allowing them to achieve a decent level of life satisfaction.
    Keywords: Human Life Quality, Determinants of Life Quality, Qualitative Research.
    JEL: C45 I31
    Date: 2013–06
  5. By: John P. Haisken-DeNew; Jan Kleibrink
    Abstract: Using data from the SOEP, we analyze the wellbeing impact of underemployment through overeducation to examine a broader definition of employment loss. Persons leaving a job through exogenous reasons but entering directly into immediate employment may not find a perfect employment match and cannot use their skills fully in the new job. We demonstrate that a „downchange“, although welfare reducing, may be more desirable than suffering the large welfare losses associated with unemployment whilst searching for a more suitable job match. Nonetheless, underemployed persons do not enter into the official job statistics, whilst their welfare loss due to „downchange“ is approximately 50% of the welfare loss of entry into unemployment.
    Keywords: Life satisfaction; skill mismatch; job change
    JEL: C23 J24 J62
    Date: 2013–07
  6. By: Felix FitzRoy (University of St. Andrews); Michael Nolan (University of Hull); Max Steinhardt; David Ulph (University of St. Andrews)
    Abstract: In contrast to previous results combining all ages we find positive effects of comparison income on happiness for the under 45s, and negative effects for those over 45. In the BHPS these coefficients are several times the magnitude of own income effects. In GSOEP they cancel to give no effect of effect of comparison income on life satisfaction in the whole sample, when controlling for fixed effects, and time-in-panel, and with flexible, age-group dummies. The residual age-happiness relationship is hump-shaped in all three countries. Results are consistent with a simple life cycle model of relative income under uncertainty.
    Keywords: subjective life-satisfaction, comparison income, reference groups, age, welfare
    JEL: D10 I31 J10
    Date: 2013–07–09
  7. By: Pfaff, Tobias; Hirata, Johannes
    Abstract: Recent studies focused on testing the Easterlin hypothesis (happiness and national income correlate in the cross-section but not over time) on a global level. We make a case for testing the Easterlin hypothesis at the country level where individual panel data allow exploiting important methodological advantages. Novelties of our test of the Easterlin hypothesis are a) long-term panel data and estimation with individual fixed effects, b) regional GDP per capita with a higher variation than national figures, c) accounting for potentially biased clustered standard errors when the number of clusters is small. Using long-term panel data for Germany and the United Kingdom, we do not find robust evidence for a relationship between GDP per capita and life satisfaction in either country (controlling for a variety of variables). Together with the evidence from previous research, we now count three countries for which Easterlin's happiness-income hypothesis cannot be rejected: the United States, Germany, and the United Kingdom. -- Die neuere Forschung hat sich darauf konzentriert die Easterlin-Hypothese (Wohlbefinden und Volkseinkommen korrelieren im Querschnitt, aber nicht in der Zeitreihe) auf globaler Ebene zu testen. Unser Artikel liefert Argumente für das Testen der Easterlin-Hypothese auf nationaler Ebene, wo individuelle Paneldaten das Ausschöpfen wichtiger methodologischer Vorteile ermöglichen. Wir erweitern die bisherige Literatur zur Easterlin-Hypothese durch a) Schätzungen mit individuellen fixen Effekten anhand von längerfristigen Paneldaten, b) Verwendung von regionalem BIP pro Kopf mit einer höheren Varianz als nationale BIP-Daten und c) Berücksichtigung von potentiell verzerrten Cluster-Standardfehlern im Fall von wenigen Clustern. Wir verwenden längerfristige Paneldaten für Deutschland und Großbritannien und finden keine robuste Evidenz für einen Zusammenhang zwischen BIP pro Kopf und Lebenszufriedenheit in den beiden Ländern (unter Verwendung von einer Reihe von Kontrollvariablen). Zusammen mit früheren Forschungsergebnissen zählen wir drei Länder in denen die Easterlin-Hypothese nicht verworfen werden kann: die Vereinigten Staaten, Deutschland und Großbritannien.
    Keywords: subjective well-being,economic growth,income,Easterlin hypothesis,Subjektives Wohlbefinden,Wirtschaftswachstum,Einkommen,Easterlin-Hypothese
    Date: 2013

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