nep-hap New Economics Papers
on Economics of Happiness
Issue of 2013‒09‒26
six papers chosen by
Viviana Di Giovinazzo
University of Milano-Bicocca

  1. Mental Illness and Unhappiness By Dan Chisholm; Richard Layard; Vikram Patel; Shekhar Saxena
  2. What do normative indices of multidimensional inequality really measure? By BOSMANS, Kristof; DECANCQ, Koen; OOGHE, Erwin
  3. Polarization of Time and Income - A Multidimensional Approach with Well-Being Gap and Minimum 2DGAP: German Evidence By Joachim Merz; Bettina Scherg
  4. Peer Groups, Employment Status and Mental Well-being among Older Adults in Ireland By Hudson, Eibhlin; Barrett, Alan
  5. More than the Sum of their Parts: Valuing Environmental Quality by Combining Life Satisfaction Surveys and GIS Data By Jérôme Silva; Zachary Brown
  6. Does Personality Affect how People Perceive their Health? By Dusanee Kesavayuth; Robert Rosenman; Vasileios Zikos

  1. By: Dan Chisholm; Richard Layard; Vikram Patel; Shekhar Saxena
    Abstract: This paper is a contribution to the second World Happiness Report. It makes five main points: 1. Mental health is the biggest single predictor of life-satisfaction. This is so in the UK, Germany and Australia even if mental health is included with a six-year lag. It explains more of the variance of life-satisfaction in the population of a country than physical health does, and much more than unemployment and income do. Income explains 1% of the variance of life-satisfaction or less. 2. Much the most common forms of mental illness are depression and anxiety disorders. Rigorously defined, these affect about 10% of all the world's population - and prevalence is similar in rich and poor countries. 3. Depression and anxiety are more common during working age than in later life. They account for a high proportion of disability and impose major economic costs and financial losses to governments worldwide. 4. Yet even in rich countries, under a third of people with diagnosable mental illness are in treatment. 5. Cost-effective treatments exist, with recovery rates of 50% or more. In rich countries treatment is likely to have no net cost to the Exchequer due to savings on welfare benefits and lost taxes. But even in poor countries a reasonable level of coverage could be obtained at a cost of under $2 per head of population per year.
    Keywords: Mental illness, welfare benefits, healthcare costs, life-satisfaction
    JEL: I10 I14 I18
    Date: 2013–09
  2. By: BOSMANS, Kristof (Department of Economics, Maastricht University, NL-6211 LM Maastricht, The Netherlands); DECANCQ, Koen (Herman Deleeck Centre for Social Policy, University of Antwerp, B-2000 Antwerp, Belgium; Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium); OOGHE, Erwin (Center for Economic Studies, KU Leuven, B-3000 Leuve, Belgium)
    Abstract: We argue that normative indices of multidimensional inequality do not only measure a distribution’s extent of inequity (i.e., the gaps between the better-off and the worse-off), but also its extent of inefficiency (i.e., the non-realized mutually beneficial exchanges of goods). We provide a decomposition that allows quantifying these two parts of inequality. Exact formulas of the inequity and inefficiency components are provided for a generic class of social welfare functions. The inequity component turns out to be a two-stage measure, which applies a unidimensional inequality measure to the vector of well-being levels. We critically discuss two prominent transfer principles, viz., uniform majorization and correlation increasing majorization, in the light of the decomposition. A decomposition of inequality in human development illustrates the analysis.
    Keywords: multidimensional inequality measurement, efficiency, uniform majorization, correlation increasing majorization
    JEL: D31 D63 I31
    Date: 2013–07–09
  3. By: Joachim Merz; Bettina Scherg
    Abstract: A growing polarization of society accompanied with an erosion of the middle class experiences more and more attention at least in the German recent economic and social policy discussion. Our study contributes to the polarization discussion with respect to multidimensional theoretical measurement and empirical application in two ways: First, we propose extended multidimensional polarization indices based on a CES-type well-being function and present a new measure to multidimensional polarization, the mean minimum polarization gap 2DGAP. This polarization intensity measure provides transparency with regard to each singular attributes – important for targeted policies – and ensures at the same time its interdependent relations. Second, the empirical application – in addition to the traditional income measure – incorporates time as a fundamental resource for any activity. In particular, genuine personal leisure time will take care of social participation in the spirit of social inclusion/exclusion and Amartya Sen’s capability approach. Instead of arbitrarily choosing the attributes’ parameters in the CES well-being function the interdependent relations of time and income will be evaluated by German Society. With the German Socio-Economic Panel (SOEP) and detailed time use diary data of the available German Time Use Survey (GTUS) 1991/92 and 2001/02 we quantify available and extended multidi-mensional polarization measures as well as our new approach for the polarization development of the working poor and the working rich in Germany. Results: Genuine personal leisure time in addition to income is an important polarization attribute. Compensation is of economic and static significance. In particular supported by the new minimum 2DGAP approach, multidimensional polarization increased over that decade in Germany.
    Keywords: Multidimensional polarization, intensity of time and income poverty and affluence, interdependent multidimensional time and income poverty and affluence, minimum multidimensional polarization gap (2DGAP), extended economic well-being, satisfaction/
    JEL: I32 D31 J22
    Date: 2013
  4. By: Hudson, Eibhlin (Trinity College Dublin); Barrett, Alan (ESRI, Dublin)
    Abstract: Research has shown that employment status, such as being unemployed or retired, can be related to well-being. In addition, the direction and size of these relationships can be influenced by the employment status of one's peer group. For example, it has been shown that the well-being of the unemployed tends to be higher for those living in high-unemployment areas compared to the unemployed living in low-unemployment areas. In this paper, we explore whether such employment peer effects impact upon the well-being of older workers. This is an important issue in the context of promoting longer working lives. If the well-being of older people in employment is lowered by low employment levels in their peer group, then sustaining high employment among older workers will be more difficult. We use data from the Irish Longitudinal Study on Ageing (TILDA) which is a nationally representative sample of people aged fifty and over and living in Ireland, collected between 2009 and 2011. Employment peer effects are proxied using the peer group non-employment rate where a peer is defined as someone in the same age-group and region and of the same gender. We find that for the employed, an increase in peer non-employment is associated with an increase in reported depressive symptoms, whereas for those not employed such an increase is associated with a decrease in reported depressive symptoms. However, these findings hold mainly for men.
    Keywords: peer groups, well-being, older adults
    JEL: I10 J26 C21
    Date: 2013–08
  5. By: Jérôme Silva; Zachary Brown
    Abstract: While environmental economics studies using stated life satisfaction data have been gaining attention, much of this body of work remains exploratory. In this study we contribute to this emerging body of research by combining OECD survey data from four European countries on life satisfaction and perceptions of environmental quality with independent (i.e. mechanical) measurements of air quality and urbanity, from the European Environment Agency, to provide a broad picture of the environmental determinants of life satisfaction, and monetary valuation of air quality improvements. We also estimate that the value of a 1% reduction in air pollution (measured as mean annual PM10 concentrations) is worth the same on average as a 0.71% increase in per capita income. We find that environments which respondents perceive as noisy and lacking in access to green space have a significantly detrimental impact on life satisfaction. However, controlling for these negative factors (air, noise, and lack of green space), we also find a large positive residual impact of urban environments on life satisfaction. The use of independent, GIS-based measures of urbanity (proportion of urban surface area around households), as opposed to survey-based stated perceptions of urbanity, increases the precision of estimated air quality impacts on life satisfaction. Taken as a whole, our analysis highlights the need for conducting LS-based environmental assessment and valuation exercises using a broad array of independent data sources, in order both to obtain unbiased regression estimates and to facilitate interpretation of these estimates. Alors que les études sur l’économie de l’environnement qui font appel à des données sur la satisfaction déclarée à l’égard de l’existence suscitent un intérêt grandissant, ces travaux conservent pour beaucoup d’entre eux un caractère exploratoire. Dans cette étude, nous apportons une contribution à ce domaine de recherche émergent en combinant des données issues d’enquêtes menées par l’OCDE dans quatre pays européens sur la satisfaction à l’égard de la vie et la qualité perçue de l’environnement, avec des mesures indépendantes (mécaniques) de la qualité de l’air et du caractère urbain provenant de l’Agence européenne pour l’environnement, dans le but de dresser un tableau général des déterminants environnementaux de la satisfaction à l’égard de la vie et de produire une évaluation monétaire des améliorations de la qualité de l’air. Nous estimons également qu’une réduction de 1 % de la pollution de l’air (mesurée comme la concentration annuelle moyenne de PM10) a la même valeur en moyenne qu’une hausse de 0.71 % du revenu par habitant. Nous constatons que les milieux perçus par les répondants comme bruyants et manquant de possibilités d’accès à des espaces verts ont un effet négatif sensible sur la satisfaction à l’égard de la vie. Cependant, si nous neutralisons l’effet de ces facteurs négatifs (air, bruit et manque d’espèces verts), nous observons aussi un fort impact résiduel positif des milieux urbains sur la satisfaction à l’égard de la vie. Le fait de recourir à des systèmes d’information géographique pour obtenir des mesures indépendantes du caractère urbain (en l’occurrence, la proportion de surfaces urbanisées autour du foyer), au lieu de s’en remettre aux appréciations sur ce point des répondants aux enquêtes, permet des estimations plus précises de l’impact de la qualité de l’air sur la satisfaction à l’égard de la vie. Dans l’ensemble, notre analyse met en lumière la nécessité de faire appel à un large éventail de sources de données indépendantes pour conduire des évaluations environnementales fondées sur la satisfaction à l’égard de la vie, afin d’obtenir des estimations par régression sans biais et de faciliter l’interprétation de ces estimations.
    Keywords: environmental valuation, life satisfaction
    JEL: C21 H23 H41 Q51 Q53 R20
    Date: 2013–04–10
  6. By: Dusanee Kesavayuth; Robert Rosenman; Vasileios Zikos (School of Economic Sciences, Washington State University)
    Abstract: We examine how personality relates to self-reported health satisfaction. With a nation-wide dataset from the United Kingdom, we provide evidence that personality influences how individuals report their satisfaction with their overall health. Using the classification of personality traits according to the Big Five factors, we show that Agreeableness, Conscientiousness and to a lesser extent Openness relate positively to health satisfaction, while Neuroticism relates negatively. Extraversion appears much less closely tied to health satisfaction. Perhaps most interesting, our results provide some evidence that personality traits mitigate the importance of the incidence of illness on health satisfaction.
    Keywords: health satisfaction, personality, Big Five factors, illness, subjective well-being
    JEL: C25 I10
    Date: 2013

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