nep-hap New Economics Papers
on Economics of Happiness
Issue of 2014‒04‒11
eleven papers chosen by
Viviana Di Giovinazzo
University of Milano-Bicocca

  1. Attitudes to Income Inequality: Experimental and Survey Evidence By Andrew E. Clark; Conchita D'ambrosio
  2. Home Sweet Home? Macroeconomic Conditions in Home Countries and the Well-Being of Migrants By Alpaslan Akay; Olivier Bargain; Klaus F. Zimmermann
  3. Multidimensionality of Longitudinal Data: Unlocking the Age-Happiness Puzzle By Ning Li
  4. Disentangling the Happiness Effects of Natural Disasters:The Mediating Role of Prosocial Behavior By Tim Tiefenbach; Florian Kohlbacher
  5. Does Labor Legislation Benefit Workers? Well-Being after an Hours Reduction By Hamermesh, Daniel S.; Kawaguchi, Daiji; Lee, Jungmin
  6. Non-monetary dimensions of well-being: A comment By Wittenberg, Martin
  7. Early Life Circumstance and Adult Mental Health By James Fenske; Achyuta Adhvaryu; Anant Nyshadham
  8. Multiple Chronic Diseases and Their Linkages with Functional health and Subjective Wellbeing among adults in the low-middle income countries: An Analysis of SAGE Wave1 Data, 2007/10 By Arokiasamy, Perianayagam; Uttamacharya, Uttamacharya; Jain, Kshipra
  9. Optimal Expectations and the Welfare Cost of Climate Variability By Alem, Yonas; Colmer, Jonathan
  10. Life-Satisfaction in Urban Ethiopia: The Role of Relative Poverty and Unobserved Heterogeneity By Alem, Yonas
  11. What predicts a successful life? A life-course model of well-being By Richard Layard; Andrew Clark; Nattavudh Powdthavee; Francesca Cornaglia

  1. By: Andrew E. Clark (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA)); Conchita D'ambrosio (Université du Luxembourg - Université du Luxembourg)
    Abstract: We review the findings in surveys and experiments from the literature on attitudes to income inequality. We interpret the latter as any disparity in incomes between individuals. We classify these contributions into two broad groups of individual attitudes to income distribution in a society: the normative and the comparative view. The first can be thought of as the individual's disinterested evaluation of income inequality; on the contrary, the second view reflects self-interest, as individual's inequality attitudes depend not only on how much income they receive but also on how much they receive compared to others. We conclude with a number of extensions, outstanding issues and suggestions for future research.
    Keywords: Attitudes ; Distribution ; Experiments ; Income inequality ; Life satisfaction ; Reference groups
    Date: 2014–03–31
  2. By: Alpaslan Akay (University of Gothenburg - University of Göteborg, IZA - Institute for the Study of Labor); Olivier Bargain (IZA - Institute for the Study of Labor, AMSE - Aix-Marseille School of Economics - Centre national de la recherche scientifique (CNRS) - École des Hautes Études en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM)); Klaus F. Zimmermann (IZA - Institute for the Study of Labor, University of Bonn - University of Bonn)
    Abstract: This paper examines whether the subjective well-being of migrants is responsive to fluctuations in macroeconomic conditions in their country of origin. Using the German Socio-Economic Panel for the years 1984 to 2009 and macroeconomic variables for 24 countries of origin, we exploit country-year variation for identification of the effect and panel data to control for migrants' observed and unobserved characteristics. We find strong (mild) evidence that migrants' well-being responds negatively (positively) to an increase in the GDP (unemployment rate) of their home country. That is, we originally demonstrate that migrants regard home countries as natural comparators and, thereby, suggest an original assessment of the migration's relative deprivation motive. We also show that migrants are positively affected by the performances of the German regions in which they live (a 'signal effect'). We demonstrate that both effects decline with years-since-migration and with the degree of assimilation in Germany, which is consistent with a switch of migrants' reference point from home countries to migration destinations. Results are robust to the inclusion of country-time trends, to control for remittances sent to relatives in home countries and to a correction for selection into return migration. We derive important implications for labor market and migration policies.
    Keywords: migrants; well-being; GDP; unemployment; relative concerns/deprivation
    Date: 2014–03
  3. By: Ning Li (Melbourne Institute of Applied Economic and Social Research)
    Abstract: In social and economic analysis of longitudinal data, the socio-economic variables that are statistically significant in pooled data regressions sometimes become insignificant after individual fixed effects are controlled for. This phenomenon has been observed in the analysis of the relationship between age and happiness. The discrepancy in results between regressions with and without controlling for individual fixed effects is sometimes known as a mystery in the research of age and happiness. This paper points out that cross-sectional information and longitudinal information reflect distinct aspects of the phenomenon under study. In age-happiness studies, cross-sectional information describes whether, in a particular year, people of a certain age are happier than people of other ages. Longitudinal information describes whether people become happier or less happy over the life cycle. The former compares happiness between different people, and the later compares happiness within the same person. Average happiness is U-shaped in age among different cohorts, and simultaneously decreases with age in the life cycle within individuals. Using data on happiness from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, this paper explains what “individual fixed effects are controlled for” means in the context of FE regression, gives insight into the age-happiness puzzle and raises awareness of the multidimensionality of longitudinal data.
    Keywords: Life satisfaction, cohort, ageing, OLS, individual fixed effects, between-person variation, within-person variation, HILDA
    JEL: I31 C10 C80
    Date: 2014–03
  4. By: Tim Tiefenbach (Business & Economics Section, German Institute for Japanese Studies (DIJ)); Florian Kohlbacher (Business & Economics Section, German Institute for Japanese Studies (DIJ))
    Abstract: Natural disasters arguably have negative effects on happiness. There are however also positive effects via an increase in donation and volunteering activities, which have been shown to lead to higher happiness as well. So far, no research has analyzed the interaction of the positive and negative effects together. In order to fill this gap in the literature, we analyze the effects of a recent, impactful disaster, while controlling for the mediating effects of volunteer activities and donation behavior. To test our hypotheses of this mediating effect of prosocial behavior on happiness after a major disaster, we use data from a large scale national survey in Japan from the years 2010-2012 to analyze the effects of ‘3-11’ (the triple disaster that occurred on March 11 2011 in Japan). We find that 3-11 (1) had a negative effect on the happiness level of the Japanese, (2) positively influenced donation behavior and volunteer activities and that by this (3) the negative direct effects are partially mitigated by the effects on prosocial behavior. The contribution of our paper is twofold. First, the paper is the first to analyze the mediating effects of prosocial behavior when evaluating the impact of natural disasters on subjective well-being. Second, while the existing studies on 3-11 –focusing on its direct main effects– report rather inconclusive findings, our analysis offers a new perspective on the debate by disentangling the direct and indirect effects of the disaster.
    Keywords: Happiness, March 11, Disaster, Japan, Prosocial Behavior, Donations, Volunteering
    JEL: Q54 I10
    Date: 2013–12
  5. By: Hamermesh, Daniel S. (University of Texas at Austin, Royal Holloway); Kawaguchi, Daiji (Hitotsubashi University); Lee, Jungmin (Sogang University)
    Abstract: Are workers in modern economies working "too hard" – would they be better off if an equilibrium with fewer work hours were achieved? We examine changes in life satisfaction of Japanese and Koreans over a period when hours of work were cut exogenously because employers suddenly faced an overtime penalty that had become effective with fewer weekly hours per worker. Using repeated cross sections we show that life satisfaction in both countries may have increased relatively among those workers most likely to have been affected by the legislation. The same finding is produced using Korean longitudinal data. In a household model estimated over the Korean cross-section data we find some weak evidence that a reduction in the husband's work hours increased his wife's well-being. Overall these results are consistent with the claim that legislated reductions in work hours can increase workers' happiness.
    Keywords: happiness, overtime work, rat-race
    JEL: J22 J23 J28
    Date: 2014–03
  6. By: Wittenberg, Martin (DataFirst, University of Cape Town)
    Abstract: Bhorat and van der Westhuizen (2013) use asset indices to explore inequality in post-Apartheid South Africa. We show that the way in which the asset indices were transformed to calculate the Gini coefficients does not preserve the relative ranking of inequality measures on subgroups. This means that the reported trends are not robust. Even if they were, it is difficult to interpret the coefficients.
    Keywords: inequality, asset index
    JEL: D63 I32
    Date: 2013
  7. By: James Fenske; Achyuta Adhvaryu; Anant Nyshadham
    Abstract: We show that psychological well-being in adulthood varies substantially with circumstance in early life.� Combining a time series of real producer prices of cocoa with a nationally representative household survey in Ghana, we find that a one standard deviation rise in the cocoa price in early life decreases the likelihood of severe mental distress in adulthood by 3 percentage points (or half the mean prevalence) for cohorts born in cocoa-producing regions relative to those born in other regions.� Impacts on related personality traits are consistent with this result.� Maternal nutrition, reinforcing childhood investments, and adult circumstances are operative channels of impact.
    Keywords: mental health, subjective well-being, early life, fetal origins, endowments, commodity prices
    JEL: I12 I15 I31 Q02 O12
    Date: 2014–02–26
  8. By: Arokiasamy, Perianayagam; Uttamacharya, Uttamacharya; Jain, Kshipra
    Abstract: This paper examines the prevalence and determinants of multiple chronic diseases and their association with the self-rated health, functional health and quality of life among adults in six SAGE countries: China, India, Russia, South Africa Mexico and Ghana. We use ADL and IADL activities as measures of functional health and WHOQoL index as a measure of quality of life. Poisson regression models are estimated to understand the social determinants of multiple chronic diseases. Logit models and OLS are estimated to examine the association between multiple chronic morbidities and self-rated health, functional health and quality of life. Russia had the highest prevalence of multi-morbidity (32.8%, 95%CI=25.5-41.1) followed by South Africa (22%, 95%CI=17.7-26.9); the other four countries had prevalence of multi-morbidity around 21%. Measures of socioeconomic status: education and wealth were found negatively associated with the number of chronic diseases. Higher number of chronic conditions was associated with the poorer self rated health, functional health and WHOQoL.
    Keywords: Multiple morbidity, Chronic diseases, Developing Countries, SAGE
    JEL: I14 I18
    Date: 2013–08
  9. By: Alem, Yonas; Colmer, Jonathan
    Abstract: Uncertainty about the future is an important determinant of well-being, especially in developing countries where financial markets and other market failures result in ineffective insurance mechanisms. However, separating the effects of future uncertainty from realised events, and then measuring the impact of uncertainty on utility, presents a number of empirical challenges. This paper aims to address these issues and provides supporting evidence to show that increased climate variability (a proxy for future income uncertainty) reduces farmers' subjective well-being, consistent with the theory of optimal expectations (Brunnermeier & Parker, 2005 AER), using panel data from rural Ethiopia and a new data set containing daily atmospheric parameters. The magnitude of our result indicates that a one standard deviation (7%) increase in climate variability has an equivalent effect on life satisfaction to a two standard deviation (1-2%) decrease in consumption. This effect is one of the largest determinants of life satisfaction in rural Ethiopia.
    Keywords: separated by commas
    JEL: C25 D60 I31
    Date: 2014–03–05
  10. By: Alem, Yonas
    Abstract: Unlike most studies of subjective well-being in developing countries, we use a fixed effects regression on three rounds of rich panel data to investigate the impact of relative standing on life satisfaction of respondents in urban Ethiopia. We find a consistently large negative impactof relative standing -- both relative to others and to oneself over time -- on subjective well-being. However, controlling for unobserved heterogeneity through a fixed effects model reduces the impact of the relative standing variables on subjective well-being by up to 24 percent and reduces the impact of economic status by about 40 percent. Our findings highlight the need to be cautious in interpreting parameter estimates from subjective well-being regressions based on cross-sectional data, as the impact of variables may not be disentangled from that of unobserved heterogeneity.
    Keywords: life satisfaction, urban Ethiopia, relative standing, fixed effects
    JEL: O12 I30 I31
    Date: 2014–03–05
  11. By: Richard Layard (London School of Economics and Political Science); Andrew Clark (Department of Electrical and Computer Engineering); Nattavudh Powdthavee; Francesca Cornaglia
    Abstract: If policy-makers care about well-being, they need a recursive model of how adult life satisfaction is predicted by childhood influences, acting both directly and (indirectly) through adult circumstances. We estimate such a model using the British Cohort Study (1970).The most powerful childhood predictor of adult life-satisfaction is the child’s emotional health. Next comes the child’s conduct. The least powerful predictor is the child’s intellectual development. This has obvious implications for educational policy. Among adult circumstances, family income accounts for only 0.5% of the variance of life-satisfaction. Mental and physical health are much more important.
    Keywords: Well-being, Life-satisfaction, Intervention, Model, Life-course, Emotional health, Conduct, Intellectual performance, Success
    JEL: A12 D60 H00 I31
    Date: 2013–10

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