nep-hap New Economics Papers
on Economics of Happiness
Issue of 2014‒12‒19
twelve papers chosen by

  1. On the causal effect of religion on life satisfaction using a propensity score matching technique By Zotti, Roberto; Speziale, Nino; Barra, Cristian
  2. Memory and Anticipation: New Empirical Support for an Old Theory of the Utility Function By John Knight; Ramani Gunatilaka
  3. Happiness and Work By Krause, Annabelle
  4. Empirical Linkages between Good Government and National Well-being By John F. Helliwell; Haifang Huang; Shawn Grover; Shun Wang
  5. Monitoring Subjective Well-Being: Some New Empirical Evidence for Germany By Erich Oltmanns; Albert Braakmann; Joachim Schmidt
  6. The Subjective Well-being Effects of Imperfect Insurance that Doesn’t Pay Out By Hirfrfot, Kibrom; Barrett, Christopher B.; Lentz, Erin; Taddesse, Birhanu
  7. “Are we wasting our talent?Overqualification and overskilling among PhD graduates” By Antonio di Paolo; Ferran Mañé
  8. Economia civile: fondamenti storici e buone pratiche attuali. Il caso "ospedale regionale di Locarno" By Massimo Folador; Angela Greco; Gaetano Citro; Maurizio Benedetti
  9. Free to Choose? Economic Freedom, Relative Income, and Life Control Perceptions By Hans Pitlik; Martin Rode
  10. Wellbeing at work and the Great Recession: The effect of others' unemployment By Cristina Borra Marcos; Francisco Gómez-García
  11. Enjoyment takes time: Some implications for choice theory By Nisticò, Sergio
  12. Do unemployment benefits and employment protection influence suicide mortality? An international panel data analysis By Rottmann, Horst

  1. By: Zotti, Roberto; Speziale, Nino; Barra, Cristian
    Abstract: Using the British Household Panel Survey (BHPS) data set, we investigate the effect of religion on subjective well-being (SWB), specifically taking into account the implication of selection effects explaining religious influence. In order to measure the level of religious involvement, we construct different indices on the base of individual religious belonging, participation and beliefs. By applying a Propensity Score Matching (PSM) estimator, we find evidence that the causal effect of religion on SWB is better captured than through typical regression methodologies focusing on the mean effects of the explanatory variables. Our results show that religious active participation plays a relevant role among the different aspects of religiosity; moreover, having a strong religious identity such as, at the same time, belonging to any religion, attending religious services once a week or more and believing that religion makes a great difference in life, has a high causal impact on subjective well-being. Our findings are robust to different aspects of life satisfaction.
    Keywords: Subjective well-being; Religion; Propensity score technique
    JEL: C21 C40 I31 Z12
    Date: 2014–10
  2. By: John Knight; Ramani Gunatilaka
    Abstract: The paper contrasts early theories of the utility function (starting with Bentham and elaborated by Jevons) with the modern theory (laid down by Fisher and Samuelson).  The former include in the utility function not only the sensation of current events but also the memory of past events and the anticipation of future events.  The alternative hypotheses are tested by introducing both past and expected future income into the estimated subjective well-being function, using an appropriate data set for China.  The tests favour the early theories.  Implications are drawn.
    Keywords: Anticipation, China, Discounted utility, Memory, Subjective well-being, Utility function
    JEL: B13 B21 D60
    Date: 2014–08–28
  3. By: Krause, Annabelle (IZA)
    Abstract: The relationship between happiness and work is subject to an ever growing empirical literature in economics. The analyses are mostly based on large-scale survey data to measure subjective well-being. Whereas one large strand of research investigates the effect of job loss and becoming unemployed, another field of study focuses on the determinants of job satisfaction evolving around employment conditions, self-employment, and potential public sector satisfaction premiums. A smaller part of the literature investigates potential driving effects of happiness on labor market outcomes. This article will give an overview about the most significant subareas of research and the empirical literature in economics to date.
    Keywords: life satisfaction, happiness, anticipation and adaptation effects, employment conditions, self-employment, unemployment, work, job satisfaction, subjective well-being
    JEL: I31 J28 J60 J64
    Date: 2014–08
  4. By: John F. Helliwell; Haifang Huang; Shawn Grover; Shun Wang
    Abstract: This paper first reviews existing studies of the links between good governance and subjective well-being. It then brings together the largest available sets of national-level measures of the quality of governance to assess the extent to which they contribute to explaining the levels and changes in life evaluations in 157 countries over the years 2005-2012, using data from the Gallup World Poll. The results show not just that people are more satisfied with their lives in countries with better governance quality, but also that actual changes in governance quality since 2005 have led to large changes in the quality of life. For example, the ten-most-improved countries, in terms of delivery quality changes between 2005 and 2012, when compared to the ten countries with most worsened delivery quality, are estimated to have thereby increased average life evaluations by as much as would be produced by a 40% increase in per capita incomes. The results also confirm earlier findings that the delivery quality of government services generally dominates democratic quality in supporting better lives. The situation changes as development proceeds, with democratic quality having a positive influence among countries that have already achieved higher quality of service delivery.
    JEL: H11 I31 P52
    Date: 2014–11
  5. By: Erich Oltmanns; Albert Braakmann; Joachim Schmidt
    Abstract: What is subjective well-being influenced by? Since the Report by the Commission on the Measurement of Economic Performance and Social Progress by Stiglitz, Sen and Fitoussi a huge number of studies has raised this question - with partly different findings. In addition, international organizations are increasingly addressing subjective well-being issues. The post-2015 development agenda of the United Nations as well as the inclusive growth strategy of the OECD may be quoted as examples. Facing the current state of national and international discussion, this paper analyses appropriate indicators for the mostly named factors influencing subjective well-being. The goal of the empirical study for Germany is twofold: First of all, the indicators discussed prominently are analysed with regard to the relevance for explaining the degree of subjective well-being (micro level). Secondly, it is examined, whether the relevance of these indicators changes over time. The empirical results presented in this paper are mainly based on yearly longitudinal data of private households in Germany. Currently, the data set covers about 21,000 individuals living in more than 12,000 private households. The data set provides information on various indicators for subjective well-being mentioned by most of the recent studies, like for instance people's life-circumstances and individual assessments. Concluding remarks concern on one hand the question if data from EU-SILC (because of its Europe-wide coverage) are useful in this context. On the other hand the combination of data at the micro level with indicators at the aggregate level is discussed as well.
    Keywords: Gross domestic product, Stiglitz-Sen-Fitoussi-Report, quality of life, Socioeconomic Panel (SOEP), Germany
    JEL: C2 I31
    Date: 2014
  6. By: Hirfrfot, Kibrom; Barrett, Christopher B.; Lentz, Erin; Taddesse, Birhanu
    Abstract: In this paper we estimate the effects of an imperfect insurance coverage on subjective well-being of a poor, rural population, by exploring whether insurance in force improves subjective well-being and whether insurance that lapsed but did not pay out leads to ex post buyer’s remorse. Exploiting randomization of incentives to purchase a newly introduced index-based livestock insurance product, we establish that even a product that did not pay out generates significant gains in well-being, on average, and that the result is robust to a host of alternative estimation approaches. We also establish that those who purchase insurance that does not pay out experience buyer’s remorse, although the magnitude of this effect is considerably smaller than that of possessing insurance, so that even an agent who can reasonably anticipate subsequent buyer’s remorse in the event that no indemnity is triggered will find it rational to purchase the product.
    Keywords: Ethiopia, index insurance, pastoralists, subjective well-being, vignettes, Institutional and Behavioral Economics, International Development, Risk and Uncertainty, D60, I32, O16,
    Date: 2014
  7. By: Antonio di Paolo (Department of Econometrics. University of Barcelona); Ferran Mañé (Universitat Rovira i Virgili & CREIP)
    Abstract: Drawing on a very rich data set from a recent cohort of PhD graduates, we examine the correlates and consequences of qualification and skills mismatch. We show that job characteristics such as the economic sector and the main activity at work play a fundamental direct role in explaining the probability of being well matched. However, the effect of academic attributes seems to be mainly indirect, since it disappears once we control for the full set of work characteristics. We detected a significant earnings penalty for those who are both overqualified and overskilled and also showed that being mismatched reduces job satisfaction, especially for those whose skills are underutilized. Overall, the problem of mismatch among PhD graduates is closely related to demand-side constraints of the labor market. Increasing the supply of adequate jobs and broadening the skills PhD students acquire during training should be explored as possible responses.
    Keywords: Overskilling, overqualification, doctors, earnings, job satisfaction JEL classification: I20, J24, J28, J31
    Date: 2014–10
  8. By: Massimo Folador; Angela Greco; Gaetano Citro; Maurizio Benedetti
    Abstract: The great financial crisis started in 2007 in the Western world has spread its bad effects to the economies of many countries and is still generating serious social problems, particularly in Europe. The globalization of markets and a financial system increasingly self-regulated are now bringing a charge against the further sustainability of the mainstream economics. Going back to the sources of the economic studies, we discover that the country where economics became an independent research field was actually Italy. In fact Antonio Genovesi, born near Naples, established the first Faculty of Economics in the mid of the 18<sup>th</sup> century. Far away from the present market economic model, the one proposed by his School was closer to the idea of economics as a social science, aimed to find out the best rules and ways of creating general well-being. Under the name of Civil Economics, values like mutual confidence, respectful relationships and ethical behavior are the essential background for individual and general progress. Other Italian famous thinkers of the time (Verri) and Adam Smith, from Scotland, took advantage from these studies for their analysis and research about the reasons of wealth and ways of growth of nations. Beccaria, Romagnosi and Cattaneo, following the same path, gave further relevant contributions in the 19th century. Nevertheless, the Industrial Revolution and the role of market as the main regulatory body of the economic system diverted the interest to the neoclassical or mainstream economics. Only more recently, some schools of management revalued such principles at a corporate level, introducing the concept of a plurality of stakeholders and the corporate social responsibility (CSR). This paper aims to verify whether the values proposed by Civil Economics can find an application in the present situation, at least at the microeconomic level of corporate organizations. Once identified an organization undertaking these values as a driver for strategies and day-by-day management, we made an appraisal of the consequences on qualitative and economic performances. Following this criteria, the case chosen is “Ospedale Regionale La Carità di Locarno” (OdL), in Switzerland, well-known for its best practices among Swiss organizations, in (and out) the health services sector. We found out that the long-time investment the management has been realizing into those ethical principles contributes to build up an intangible asset generating economic and social value. Organizational behaviors and rules fostering innovation and individual commitment create ongoing qualitative improvements, high levels of stakeholders’ satisfaction and first-rate economic performances, placing OdL as an example of excellence in its field of activity.
    Date: 2014–09
  9. By: Hans Pitlik (WIFO); Martin Rode (WIFO)
    Abstract: Recent research has shown that the degree to which people feel they are in control of their lives is an important correlate of individual happiness, where those that feel more in control are also found to be systematically happier. In turn, the economic sources of perceived life control are only insignificantly established in the relevant literature. The present paper employs individual data from the most recent version of the World Value Survey, covering the period from 1981 to 2013, to establish the macro-determinants of individual life control. We find that living in a country with high overall economic freedom is a major determinant of feeling in control of one's own life. The effect is very similar for individuals in high and low income countries, while the impact of democracy is negligible in both cases. Interacting relative income with economic freedom, we find that – contrary to conventional wisdom – it is by far the lower income groups that derive the biggest gain of perceived life control from living in a country with comparatively high economic freedom.
    Keywords: Locus of control, Economic institutions, Well-Being, Democracy
    Date: 2014–11–11
  10. By: Cristina Borra Marcos (Dpto. Economía e Historia Económica); Francisco Gómez-García (Dpto. Economía e Historia Económica)
    Abstract: The recent recession has generated a tremendous increase in unemployment rates in Spain. In this paper we use a very rich repeated cross-section dataset on workers’ job conditions, together with regional unemployment rates, to investigate whether peers’ unemployment affects individuals’ job satisfaction. We find that, once perceived job stability is controlled for, peers’ unemployment shows a positive effect on individuals’ wellbeing at work, larger and more precisely estimated for men and private-sector workers. The impact is highly non-linear and the largest effect is found for unemployment rates exceeding 10%. Interestingly, the results are robust to controlling for workforce selection. La recesión reciente ha generado un gran incremento de las tasas de desempleo en España. En este artículo se utiliza una fusión de cortes transversales sobre las condiciones de trabajo, lo que junto a las tasas de desempleo regionales nos permite investigar si el desempleo de los pares afecta a la satisfacción laboral de los individuos. Llegamos a que, una vez controlada la estabilidad en el empleo, el desempleo de los pares muestra un efecto positivo sobre la satisfacción laboral. Este efecto es mayor para los hombres y los trabajadores del sector privado. Además, el impacto es no lineal y el efecto mayor se encuentra para una tasa de desempleo mayor al 10%. Los resultados son robustos y no hay problemas de selección muestral.
    Keywords: Satisfacción laboral, tasa de desempleo, posición relativa, inseguridad laboral, España, Gran Recesión Job satisfaction, unemployment rate, relative position, job insequrity, Spain, Great Recession
    JEL: I31 J28 E24
    Date: 2014–10
  11. By: Nisticò, Sergio
    Abstract: The paper suggests that casting the choice problem in terms of alternative time-consuming activities can foster the fruitful cross-fertilization between economics and psychology along the lines suggested by Scitovsky in the Joyless Economy. The first part emphasizes how mainstream, utility-based choice theory has eradicated "time" from the analysis, in contrast with the seminal contribution to the subjective theory of value proposed by Gossen in 1858. The limits of Becker's well-known approach to time-use are also analyzed. The second part opens with the presentation of an alternative approach based on activities, intended as productive processes allowing for pleasant time to be produced by consuming "direct" unpleasant time plus the "indirect" amount of unpleasant time equivalent to the market goods used up as inputs. Finally, the approach is applied to an intertemporal context by drawing on Hicks's temporary equilibrium method. Scitovsky's distinction between defensive and creative activities is discussed in conclusion, suggesting that individuals might refrain from engaging in more skilled, time-consuming activities because of the attractiveness of a certain, higher present-period rate of return of less skilled, goods-intensive activities.
    Keywords: Time use,consumption Activities,behavior,choice
    JEL: B41 D03 D11 D81
    Date: 2014
  12. By: Rottmann, Horst
    Abstract: We examine the economic and social determinants of suicide mortality in a panel of 25 OECD countries over the period 1970 - 2011 and explicitly analyze the effects of unemployment and labor market institutions on suicide rates. In line with a large body of literature, our results suggest that unemployment and social factors are important determinants of suicide mortality. The results also indicate that unemployment benefits decrease suicides of males, while relatively strict employment protection regulations increase suicide mortality. These findings indicate that labor market institutions may influence job satisfaction and the quality of life in industrial countries. We suggest taking into account the role of labor market institutions when analyzing the effects of institutional and economic determinants on health.
    Keywords: Panel Data,Suicide,Employment Protection,Unemployment Benefits
    JEL: C23 E24 I10 J65
    Date: 2014

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.