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on Economics of Happiness |
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Issue of 2014‒01‒17
seven papers chosen by |
| By: | James Banks; Christopher J. Boyce; Gordon D.A. Brown; Andrew E. Clark; Alex M. Wood |
| Abstract: | Higher income is associated with greater well-being, but do income gains and losses impact on well-being differently? Loss aversion, whereby losses loom larger than gains, is typically examined with relation to decisions about anticipated outcomes. Here, using subjective well-being data from Germany (N = 28,723) and the UK (N = 20,570), we find that experienced falls in income have a larger impact on well-being than equivalent income gains. The effect is not explained by the diminishing returns to well-being of income. Our findings show that loss aversion applies to experienced losses, counteracting suggestions that loss aversion is only an affective forecasting error. Longitudinal studies of the income/well-being relationship may, by failing to take account of loss aversion, have overestimated the positive effect of income for well-being. Moreover, societal well-being may be best served by small and stable income increases even if such stability impairs long-term growth. |
| Keywords: | Loss aversion, money, income, subjective well-being |
| JEL: | D03 D31 I31 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepops:39&r=hap |
| By: | Arie Kapteyn (University of Southern California, Dornsife Center for Economic and Social Research); Jinkook Lee (RAND); Gema Zamarro (University of Southern California, Dornsife Center for Economic and Social Research) |
| Abstract: | How does retirement influence subjective well-being? Some studies suggest retirement does not affect subjective well-being or may improve it. Others suggest it adversely affects it. This paper aims at advancing our understanding of the effect of retirement on subjective well-being by (1) using longitudinal data to tease out the retirement effect from age and cohort differences; (2) using instrumental variables to address potential reverse causation of subjective well-being on retirement decisions; and (3) conducting cross-country analyses, exploiting differences in eligibility ages for retirement benefits across countries and within countries. We use panel data from the US Health and Retirement Study and the Survey of Health, Ageing, and Retirement in Europe. This allows us to use a quasi-experimental approach where variations in public pension eligibility due to country and cohort specific retirement ages help identify retirement effects. For both the U.S. and Europe we find that retirement is associated with higher levels of depression. However, when we use instrumental variables we find the opposite result. Retirement induced through Social Security pension eligibility is found to have a positive effect, reducing depression symptoms, although only marginally significant for the U.S. when considering the depression indicator. Retirement is not found to have a significant effect on life satisfaction measures for either the U.S. or Europe. |
| Date: | 2013–10 |
| URL: | http://d.repec.org/n?u=RePEc:mrr:papers:wp301&r=hap |
| By: | Yew-Kwang NG (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Singapore, 637332.) |
| Abstract: | Despite recent intense interest, happiness studies have been impeded by some conceptual and methodological problems, including viewing happiness (well-being/welfare) as different over different persons, as relative, multi-dimensional, non-cardinally measurable, interpersonally noncomparable and using non-cardinal and interpersonally non-comparable methods of happiness measurement. Using the evolutionary biology of happiness, this paper argues that happiness is absolute, universal, and unidimensional and is also cardinally measurable and interpersonally comparable. This is needed to make choices motivated by reward (pleasure) and punishment (pain) consistent with fitness maximization. However, happiness indices obtained by virtually all existing methods of happiness measurement are largely non-cardinal and non-comparable, making the use of averaging in group happiness indices of dubious philosophical validity. A method of measuring happiness to give cardinal and interpersonally comparable indices is discussed. These may contribute towards the more scientific study of happiness that is based on sounder methodological grounds as well as yielding more useful results. |
| Keywords: | Evolutionary biology; happiness; interpersonal comparison; measurability; wellbeing; welfare. |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:nan:wpaper:1308&r=hap |
| By: | Nguyen, Cuong Viet; Vu, Linh Hoang |
| Abstract: | Working away from home might bring higher earnings than working near home. However, the absence of parents due to work can have unexpected effects on children. This paper examines the effects of the temporary absence of parents on the well-being of children aged 5–8 years old in Vietnam, using indicators of household poverty, per capita consumption expenditure, and child time allocation. The paper relies on OLS and fixed-effects regression and panel data from the Young Lives surveys in 2007 and 2009. It finds a positive correlation between parental absence and per capita expenditure. Parental absence tends to increase per capita food expenditure instead of per capita non-food expenditure. Regarding the way children spend their time, there are no statistically significant effects of parental absence. |
| Keywords: | Parental migration, child poverty, remittances, impact evaluation, Vietnam. |
| JEL: | I3 O15 R23 |
| Date: | 2014–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:52877&r=hap |
| By: | Blum, Matthias; Hanley, Nicholas; McLaughlin, Eoin |
| Abstract: | Genuine Savings (GS), also known as ‘net adjusted savings', is a composite indicator of the sustainability of economic development. Genuine Savings reflects year-on-year changes in the total wealth or capital of a country, including net investment in produced capita, investment in human capital, depletion of natural resources, and damage caused by pollution. A negative Genuine Savings rate suggests that the stock of national wealth is declining and that future utility must be less than current utility, indicating that economic development is non-sustainable (Hamilton and Clemens, 1999). We make use of data over a 150 year period to examine the relationship between Genuine Savings and a number of indicators of well-being over time, and compare the relative changes in human, produced, and components of natural capital over the period. Overall, we find that the magnitude of genuine savings is positively related to changes in future consumption, with some evidence of a cointegrating relationship. However, the relationships between genuine savings and infant mortality or average heights are less clear. |
| Keywords: | well-being; Genuine Savings; Net adjusted savings; economic development; Sustainability |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:stl:stledp:2013-13&r=hap |
| By: | Collewet, Marion |
| Abstract: | This paper discusses three approaches to well-being in economics which use insights from psychology to support their position: Scitovsky's Joyless Economy, happiness economics, and the constitutional approach to happiness in economics. It shows that in the way these approaches make use of psychology, normative choice is involved, and there is room for personal judgement. First, an approach to well-being, as an approach to what is worth pursuing, is necessarily normative. The use of psychological theories to support an approach to well-being relies on a normative step, revealed by the choice of a psychological theory by the economist. Second, personal judgement is often needed to translate the findings of psychology to recommendations for practice. Both things have implications for those theories which define well-being as something different than the fulfillment of individual preferences whatever they are, and therefore yield potential for paternalism. The paternalistic recommendations derived by economists are not based on positive science only, but also rely on personal judgement and normative choice. -- |
| Keywords: | paternalism,well-being,Scitovsky,happiness economics,constitutional approach |
| JEL: | I31 D71 B21 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:20141&r=hap |
| By: | Heinz Welsch (University of Oldenburg, Institut für Volkswirtschaftslehre & ZenTra); Philipp Biermann (University of Oldenburg, Institut für Volkswirtschaftslehre) |
| Abstract: | We test whether the relationship between subjective well-being (SWB) of European citizens and the structure of electricity supply has changed after the Fukushima nuclear accident of March 11, 2011. Survey data for about 124,000 individuals in 23 European countries reveal that while European citizens’ SWB was statistically unrelated to the share of nuclear power before the Fukushima disaster, it was negatively related to the nuclear share after the disaster. Taking the relationship between SWB and the electricity supply structure as an indicator of preference, this suggests the existence of an induced transnational preference change. |
| Keywords: | transnational preference change; subjective well-being; nuclear power; Fukushima |
| JEL: | Q42 Q54 I31 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:zen:wpaper:27&r=hap |