nep-hap New Economics Papers
on Economics of Happiness
Issue of 2014‒04‒18
fourteen papers chosen by
Viviana Di Giovinazzo
University of Milano-Bicocca

  1. Does inequality harm democracy? An empirical investigation on the UK By A. Soci; A. Maccagnan; D. Mantovani
  2. Pay Growth, Fairness and Job Satisfaction: Implications for Nominal and Real Wage Rigidity By Smith, Jennifer C
  3. Believing in Oneself: Can Psychological Training Overcome the Effects of Social Exclusion? By Ghoshal, Sayantan; Jana, Smarajit; Mani, Anandi; Mitra, Sandip; Roy, Sanchari
  4. Ethnic Inequality By Alesina, Alberto; Michalopoulos, Stelios; Papaioannou, Elias
  5. Do Happier Britons Have More Income? First-Order Stochastic Dominance Relations By Hammond, Peter J; Liberini, Federica; Proto, Eugenio
  6. Human well-being and in-work benefits: A randomized controlled trial By Dorsett, Richard; Oswald, Andrew J.
  7. Does the Risk of Poverty Reduce Happiness? By Stefano A. Caria; Paolo Falco
  8. The Welfare Impact of Land Redistribution: Evidence from a Quasi-Experimental Initiative in Malawi By Mariapia Mendola; Franklin Simtowe
  9. Housing Provision, Finance, and Well-Being in Europe. By Mary Robertson
  10. Local Segregation and Well-being By Coral del Rio; Olga Alonso-Villar
  11. Multidimensional polarization for ordinal data By Martyna Kobus
  12. Dimensions and determinants of upward mobility : a study based on longitudinal data from Delhi slums By Mitra, Arup; Tsujita, Yuko
  13. Cultural Openness, Interpersonal Justice, and Job Satisfaction among Millennials and Seniors: Evidence from Japanese Target Employees following M&A By Ralf Bebenroth; Maimunah Ismail
  14. (Un)happy transition? Subjective Well-being in European Countries in 1991-2008 and Beyond By Jirí Vecerník; Martina Mysíková

  1. By: A. Soci; A. Maccagnan; D. Mantovani
    Abstract: This paper presents an empirical investigation about the effect of an increase in economic inequality on some aspects of the quality of a democracy. The main novelty of the paper lies in its methodology: it applies to a single country (instead of a pool of countries) - the UK - in a long run perspective. Using survey data, we select three questions and check whether an increase in inequality alters the answers to these questions, subject to other control variables. Another novelty is the use of several measures of inequality (rather than the usual GINI only) both for disentangling what happens in the different parts of the income distribution and for avoiding the dependence of the results on the choice of the indicator. The main finding is that a higher level of income inequality impacts negatively on citizens’ satisfaction with democracy and positively on their political participation.
    JEL: D33 D72 D63 O15
    Date: 2014–04
  2. By: Smith, Jennifer C (University of Warwick)
    Abstract: Theories of wage rigidity often rely on a positive relationship between pay changes and utility, arising from concern for fairness or gift exchange. Supportive evidence has emerged from laboratory experiments, but the link has not yet been established with ?eld data. This paper contributes a ?rst step, using representative British data. Workers care about the level and the growth of earnings. Below-median wage increases lead to an insult e¤ect except when similar workers have real wage reductions or ?rm production is falling. Nominal pay cuts appear insulting even when the ?rm is doing badly.
    Keywords: Pay cuts, Social comparisons, Gift exchange
    Date: 2013
  3. By: Ghoshal, Sayantan (Glasgow University); Jana, Smarajit (Durbar University); Mani, Anandi (University of Warwick); Mitra, Sandip (ISI Kolkata); Roy, Sanchari (University of Warwick)
    Abstract: This paper examines whether psychological empowerment can mitigate mental constraints that impede efforts to overcome the effects of social exclusion. Using a randomized control trial, we study a training program specifically designed to reduce stigma and build self-efficacy among poor and marginalized sex workers in Kolkata, India. We find positive and significant impacts of the training on self-reported measures of efficacy, happiness and self-esteem in the treatment group, both relative to the control group as well as baseline measures. We also find higher effort towards improving future outcomes as measured by the participants’ savings choices and health-seeking behaviour, relative to the control group. These findings highlight the need to account for psychological factors in the design of antipoverty programmes.
    Keywords: social exclusion, self-efficacy, self-esteem, future-orientation, sex workers
    Date: 2013
  4. By: Alesina, Alberto (Harvard University, NBER and IGIER); Michalopoulos, Stelios (Brown University and NBER); Papaioannou, Elias (London Business School, CEPR and NBER)
    Abstract: This study explores the consequences and origins of between-ethnicity economic inequality both across and within countries. First, combining satellite images of nighttime luminosity with the historical homelands of ethnolinguistic groups we construct measures of ethnic inequality for a large sample of countries and show that the latter is strongly inversely related to comparative development. Second, differences in geographic endowments across ethnic homelands explain a sizable portion of ethnic inequality contributing to its persistence over time. Third, exploiting across-district within-African countries variation using individual-level data on ethnic identification and well-being from the Afrobarometer Surveys we find that between ethnic-group inequality is systematically linked to regional under-development. In this sample we also explore the channels linking ethnic inequality to (under) development, finding that ethnic inequality maps to political inequality, heightened perceptions of discrimination and undersupply of public goods.
    Keywords: Ethnicity, Diversity, Inequality, Development, Geography
    Date: 2013
  5. By: Hammond, Peter J (University of Warwick); Liberini, Federica (Zurich, Switzerland); Proto, Eugenio (University of Warwick)
    Abstract: Using British Household Panel Survey data, for subjects not reporting the highest permitted satisfaction level, we show that the conditional income distribution given a higher reported level of life satisfaction rst-order stochastically dominates the corresponding conditional distribution given any lower satisfaction level. Subjects reporting the highest satisfaction level, however, have an income distribution dominated by distributions for some less satised individuals. Interestingly, this \top anomaly" is undetectable by standard ordered probit analysis. An alternative binary probit model for reporting maximal satisfaction suggests a possible explanation: more educated subjects not only tend to have higher income, but are also less likely to report maximal satisfaction.
    Date: 2013
  6. By: Dorsett, Richard (National Institute of Economic and Social Research); Oswald, Andrew J. (University of Warwick)
    Abstract: Many politicians believe they can intervene in the economy to improve people’s lives. But can they? In a social experiment carried out in the United Kingdom, extensive in-work support was randomly assigned among 16,000 disadvantaged people. We follow a sub-sample of 3,500 single parents for 5 ensuing years. The results reveal a remarkable, and troubling, finding. Long after eligibility had ceased, the treated individuals had substantially lower psychological well-being, worried more about money, and were increasingly prone to debt. Thus helping people apparently hurt them. We discuss a behavioral framework consistent with our findings and reflect on implications for policy.
    Keywords: Well-Being
    Date: 2014
  7. By: Stefano A. Caria (University of Oxford); Paolo Falco (University of Oxford)
    Keywords: poverty, vulnerability, risk, subjective well-being, happiness, loss-aversion
    JEL: D60 I31 I32 D81 O12
    Date: 2014–04–07
  8. By: Mariapia Mendola (University of Milan Bicocca, Centro Studi Luca d\'Agliano and IZA); Franklin Simtowe (African Centre for Social research and Economic Development, Nairobi)
    Abstract: Even though land reform may be an effective means of reducing poverty, evidence on its causal effects is scant. This paper uses household panel data combined with a quasi-experimental program to assess the impact of a joint Malawi/World Bank land redistribution project on households’ productivity and well-being in southern Malawi. Double difference and matching methods are used to address sources of bias in identifying impacts. Results point to average positive effects of the land program on land holdings, agricultural output, income, food security and asset ownership of beneficiary households, while the latter do not see an improvement in access to social services such as schools and health care facilities. There is also evidence of heterogeneous effects by gender and inheritance systems. Overall, our findings suggest that there is scope for reducing poverty and inequality in developing countries by implementing a market- and community-based approach to land reform through the provision of land to land-poor households.
    Keywords: Land Reform, Program Evaluation, Community Based Rural Land Development Program, Malawi
    JEL: O13 Q15
    Date: 2014–04–07
  9. By: Mary Robertson (School of Oriental and African Studies, University of London)
    Abstract: This paper explores the role of housing in households’ increasing financial activities. First, I build on quantitative work on the growth of housing related debt across Europe carried out under WP5 by presenting data on rates of homeownership, levels and types of mortgage debt, and house prices (and, by implication, housing wealth). I find that, although there is a general tendency for all to increase, differences in the structures of housing provision across countries lead to significant variation in both the data, and what can be drawn from it, across countries. Second, I consider accounts of households’ growing financial activities that attribute a central role to housing, including Lapavitsas and Dos Santos’s ‘financial expropriation’ thesis, and a growing body of literature that sees Europe as moving towards a housing asset-based welfare model. I argue that both, in different ways, are insufficiently attentive to the way in which housing provision, the role of finance within it, and the relationship of both to the reproduction of labour power more generally, are all uniquely and distinctly structured in different countries. I also show that even in the UK, where the role of finance in housing and welfare provision is thought to be most advanced, the restructuring of housing and welfare in favour of finance remains limited and contradictory. Finally, I outline some preliminary findings on the impact that a growing tendency to treat one’s home as an asset has had on well-being.
    Keywords: financialisation, housing, house prices, mortgage markets, systems of provision, well-being, asset-based welfare, financial expropriation, mortgage equity withdrawal.
    JEL: B59 D69 G10 G20 H31 H39 I31 I38 P16 P52 R21
    Date: 2014–03–06
  10. By: Coral del Rio (Universidade de Vigo and EQUALITAS); Olga Alonso-Villar (Universidade de Vigo and EQUALITAS)
    Abstract: This paper proposes an index that quantifies the well-being (ill-being) of a target group as associated with its occupational segregation: that is, it assesses the gains/losses of that group which are derived from its underrepresentation in some occupations and overrepresentation in others. This index has several good properties. In particular, it is equal to zero when either the group has no segregation or all occupations have the same wage, and increases when individuals of the group move into occupations that have higher wages than those left behind. Moreover, our well-being measure permits to rank different demographic groups using distributive value judgments that are in the line of those conducted in the literature on economic inequality.
    Keywords: Segregation measures; occupations; status; well-being; ill-being.
    JEL: D63 J0 J15 J71
    Date: 2014–01
  11. By: Martyna Kobus (Institute of Economics, Polish Academy of Sciences)
    Abstract: Western governments increasingly place more emphasis on non-income dimensions in measuring national well-being (e.g. the UK, France). Not only averages, but the characteristics of the whole distribution (e.g. inequalities) are taken into consideration. Commonly used data such as life satisfaction, declared health status or level of education, however, are ordinal in nature and the fundamental problem of measuring inequality with ordinal variables exists. Here, a class of multidimensional inequality indices for ordinal data is characterized by inequality axioms and based on the characterization theorem an inequality measure is proposed. The method ensures that the index is also attribute decomposable, that is, we can estimate the contribution to overall inequality from inequality in dimensions and from their association. It was found for the period 1972-2010 in the US, excluding 1985 that inequality in perceived happiness contributed more to overall inequality than health inequality. Joint inequality in health and happiness was significantly higher in the first half of the study period (0.3 vs. 0.2). In the 1970s and 1980s most healthy people were also happier and this positive association increased inequality by around 20 percent. This trend was reversed in the late 1980s when the contribution of association became negative. This trend for the healthiest to no longer be the happiest persisted with the exception of three years.
    Keywords: Multidimensional inequality, ordinal data, copula function.
    JEL: D3 D6
    Date: 2014–03
  12. By: Mitra, Arup; Tsujita, Yuko
    Abstract: This study based on two primary surveys of the same households in two different years (2007/08 and 2012) assesses the extent of inter-temporal change in income of the individual workers and makes an attempt to identify the factors which explain upward mobility in alternate econometric framework, envisaging endogeneity problem. It also encompasses a host of indicators of wellbeing and constructs the transition matrix to capture the extent of change over time at the household level. The findings are indicative of a rise in the income of workers across a sizeable percentage of households though many of them remained below the poverty line notwithstanding this increase. In fact, there is a wide spread deterioration in the wellbeing index constructed at the household level. Among several determinants of income rise two important policy prescriptions can be elicited. Inadequate education reduces the probability of upward mobility while education above a threshold level raises it. Savings are crucial for upward mobility impinging on the importance of asset creation. Views that entail neighbourhood spill-over effects also received validation. Besides, investment in housing and basic amenities turns out to be crucial for improvement in wellbeing levels.
    Keywords: India, Household, Income distribution, Education, Mobility, Wellbeing, Saving
    JEL: I3 J6 R2
    Date: 2014–03
  13. By: Ralf Bebenroth (Research Institute for Economics and Business Administration, Kobe University, Japan); Maimunah Ismail (Department of Professional Development and Continuing Education,Faculty of Educational Studies,Universiti Putra Malaysia, Malaysia)
    Abstract: This study compares the perceptions of Millennials with those of senior employees in a cross border acquisition. Literature on Millennials argues that since they are open-minded, it can be assumed they would enjoy greater job satisfaction after their firm is acquired by another company. We investigated how employees perceived interpersonal justice and its influence on job satisfaction, and to what extent employees' culturally open mindedness mediated this relationship. The results showed that employees, regardless of age, enjoyed greater job satisfaction after an acquisition when they perceived that they were being treated fairly by the new management. This study also showed that senior employees, not the Millennials of the target firm were more culturally open-minded. However, culturally open minded seniors were the less job satisfied. Implications for human resource practices are discussed.
    Date: 2014–04
  14. By: Jirí Vecerník; Martina Mysíková
    Abstract: This paper contributes to the debate about the impact of the transition to subjective well-being. After reviewing the relevant literature the authors draw on the surveys of the European Values Study between 1991 and 2008 to describe the trends in life satisfaction in 13 "Western" and 11 "Eastern" countries. The analysis finds that life satisfaction levels in transition countries have come to approach those in the West: the "rather unhappy" 1990s were followed by the "rather happy" 2000s. The correlation between life satisfaction and GDP reflects this process of convergence: the two separate lines in 1991 merge to become a single continuum later on. The characteristics of respondents are however more important than GDP, and a regression of life satisfactions with basic demographic and stratification variables shows their reinforcing effect in both Eastern and Western countries. As a result, the explained variance of life satisfaction was increasing. The findings of other surveys reporting on developments of attitudes since 2008 vary but are far from proving a uniform negative impact of economic recession on life satisfaction. The paper concludes by suggesting that various surveys have to be compared in order to obtain more reliable information on the development and factors of subjective well-being.
    Date: 2014–04–09

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