nep-hap New Economics Papers
on Economics of Happiness
Issue of 2015‒01‒03
ten papers chosen by
Viviana Di Giovinazzo
Università degli Studi di Milano-Bicocca

  1. Who Benefits from Economic Freedom? Unraveling the Effect of Economic Freedom on Subjective Well-Being By Gehring, Kai
  2. Social Capital Stocks, Giving Flows and Welfare Outcomes By Lorna Zischka
  3. The happy farmer: Self-employment and subjective well-being in rural Vietnam By Markussen, Thomas; Fibaek, Maria; Tarp, Finn; Nguyen, Do Anh Tuan
  4. Zukunftsangst! Fear of (and Hope for) the Future and Its Impact on Life Satisfaction By Alan Piper
  5. Happiness of economists By Lars P. Feld; Sarah Necker; Bruno S .Frey
  6. Two-way Causation in Life Satisfaction Research: Structural Equation Models with Granger-Causation By Headey, Bruce; Muffels, Ruud
  7. A Family Affair: Job Loss and the Mental Health of Spouses and Adolescents By Melisa Bubonya; Deborah A. Cobb-Clark; Mark Wooden
  8. Income poverty measures with relative poverty lines By DECERF, Benoit
  9. Inequality, income, and well-being By DECANCQ, Koen; FLEURBAEY, Marc; SCHOKKAERT, Erik
  10. Measuring Well-being and Progress in Countries at Different Stages of Development: Towards a More Universal Conceptual Framework By Romina Boarini; Alexandre Kolev; Allister McGregor

  1. By: Gehring, Kai
    Abstract: Who benefits from economic freedom? Results from a panel of 86 countries over the 1990–2005 period suggest that overall economic freedom has a significant positive effect on subjective well-being. Its dimensions legal security and property rights, sound money, and regulation are in particular strong predictors of higher well-being. The overall positive effect is not affected by socio-demographics; the effects of individual dimensions vary, however. Developing countries profit more from higher economic freedom, in particular from reducing the regulatory burden. Culture moderates the effect: societies that are more tolerant and have a positive attitude toward the market economy profit the most.
    Keywords: economic freedom; happiness; life satisfaction; government size; institutions; economic freedom; happiness; government size
    Date: 2014–11–18
  2. By: Lorna Zischka (Department of Economics, University of Reading)
    Abstract: Giving is a quintessentially relational activity. Giving time and money to meet the needs of persons other than oneself fosters interpersonal trust, social cohesion and collaboration; relational factors that are foundational to productivity and life-satisfaction. Citizenship Survey data from the UK is used to provide empirical evidence for the link between this ‘social capital’ and giving, and giving and welfare outcomes. Welfare is measured in private terms (life-satisfaction and income) as well as in communal terms (trust, crime and deprivation). We find that giving levels interact with all expressions of welfare on a similar scale to big social issues like unemployment, race, education, ill-health and low incomes. People who give only when constrained to do so by social pressures have less association with positive welfare outcomes than those who give freely. We propose that giving flows link social capital stocks to welfare outcomes, and that positive welfare outcomes also incentivize time and money investments back into the relational (social) capital stock. Understanding social capital and its benefits through the prism of giving flows clarifies how one might invest in the relational stock. It also bypasses many measurement complexities by targeting the flow to and from the stock rather than the stock itself.
    Date: 2014–07–17
  3. By: Markussen, Thomas; Fibaek, Maria; Tarp, Finn; Nguyen, Do Anh Tuan
    Abstract: Using survey data from rural Vietnam, this paper documents a statistically significant, positive effect of self-employment in farming on subjective well-being. Wage workers are less happy than farmers across a range of different types of wage jobs. These
    Keywords: happiness, self-employment, wage work, agriculture, Vietnam
    Date: 2014
  4. By: Alan Piper
    Abstract: The thoughts that an individual has about the future contribute substantially to their life satisfaction in a positive or negative direction. This is a result found via five different methods, some of which control for personality and disposition and the potential endogeneity of thoughts and life satisfaction. The reduction in life satisfaction experienced by individuals who report being pessimistic is greater than that for well-known objective statuses like unemployment. Including individuals’ thoughts about the future substantially increases the explanatory power of standard life satisfaction models. Life satisfaction is made up of objective and subjective factors and methods exist to account for their potential endogeneity to enhance our understanding of well-being. This investigation is an example of such an analysis combining a subjective factor, thoughts about the future (treated as endogenous), with more standard objective factors to aid understanding regarding well-being.
    Keywords: Life Satisfaction, Subjective Well-Being, GMM, Dynamics, Endogeneity, SOEP, ESS
    JEL: C23 D84 I31
    Date: 2014
  5. By: Lars P. Feld; Sarah Necker; Bruno S .Frey
    Abstract: This study investigates the determinants of economists’ life satisfaction. The analysis is based on a survey of professional, mostly academic economists from European countries and beyond. We find that certain features of economists’ professional situation influence their well-being. Happiness is increased by having more research time while the lack of a tenured position decreases satisfaction in particular if the contract expires in the near future or cannot be extended. Surprisingly, publication success has no effect on satisfaction. While the perceived level of external pressure also has no impact, the perceived change of pressure in recent years has. Economists may have accepted a high level of pressure when entering academia but do not seem to be willing to cope with the increase observed in recent years.
    Keywords: Happiness; academiclabormarket; extrinsicandintrinsicmotivation; publish or perish-culture
    JEL: I31 A11 J28
    Date: 2014–11
  6. By: Headey, Bruce (Melbourne Institute of Applied Economic and Social Research); Muffels, Ruud (Tilburg University)
    Abstract: Two-way causation issues are the bete noire of life satisfaction research. As acknowledged in several landmark reviews, many variables routinely reported as causes or determinants of life satisfaction could equally well be consequences, or perhaps both causes and consequences (Diener, 1984; Diener, Suh, Lucas and Smith, 1999; Argyle, 2001; Frey and Stutzer, 2002). These variables include one's state of health, social support and participation, exercise, job satisfaction and satisfaction with one's partner and family life. In previous attempts to disentangle two-way causation issues, a wide variety of statistical models have been deployed. Conflicting empirical results have been reported, together with concerns about model 'goodness of fit' and model stability. In this paper we estimate five-wave structural equation models using data from large, nationally representative panel surveys in Australia, Britain and Germany. The models are based on a modified concept of Granger-causation (Granger, 1969). The main intuition behind Granger-causation is that if lagged versions of time-series variable x have statistically significant effects on time-series variable y in equations in which multiple lagged versions of y are also included, then it can be inferred that x is one cause (or 'Granger-cause') of y. We adapt Granger's approach, extending it to encompass two-way causation and panel survey data. It transpires that our Granger-style models have satisfactory fits to the panel data and are stable. Alternative models fit the data much less well. Substantively, we find that two-way causation is pervasive: all of the x variables mentioned above appear to be both causes and consequences of life satisfaction. With minor exceptions, results replicate across all three datasets, despite non-trivial differences between the measures used in the three countries. One implication is that researchers who have assumed one-way causation have seriously over-estimated the effects of x variables on LS. A second implication is that many people apparently experience multi-year gains or losses of life satisfaction rather than just recording short term fluctuations around their own normal level or 'set-point'.
    Keywords: life satisfaction, health, job satisfaction and social behaviours, two-way causation, Granger-causation, panel surveys
    JEL: J01 I12 I31
    Date: 2014–11
  7. By: Melisa Bubonya (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Deborah A. Cobb-Clark (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; Institute for the Study of Labor (IZA); and ARC Centre of Excellence for Families and Children over the Life Course); Mark Wooden (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne; and Institute for the Study of Labor (IZA))
    Abstract: This study examines the impact of involuntary job loss on the mental health of family members. Estimates from fixed-effects panel data models, using panel data for Australia, provide little evidence of any negative spillover effect on the mental health of husbands as a result of their wives’ job loss. The mental well-being of wives, however, declines following their husbands’ job loss, but only if that job loss results in a sustained period of nonemployment or if the couple experienced financial hardship or relationship strain prior to the husband’s job loss. A negative effect of parental job loss on the mental health of co-resident adolescent children is also found, but appears to be restricted to girls.
    Keywords: Unemployment, involuntary job loss, mental health, families, spouses, adolescents, HILDA Survey
    JEL: I31 J10 J65
    Date: 2014–11
  8. By: DECERF, Benoit (Université catholique de Louvain, CORE, Belgium; Bielefeld University, Germany.)
    Abstract: I derive poverty indices taking into account both the absolute and relative aspects of income well-being. The trade-off made by the social planner between those two aspects is captured at individual level by a well-being ordering. This ordering evaluates the well-being of an agent based on her income and a reference statistic on the income distribution, typically the mean. A family of poverty indices respecting the judgements held in the ordering is axiomatically characterized. Then, I study the consequences of requiring the poverty indices to grant a minimal precedence to the absolute over the relative aspect of income well-being. This compelling requirement has strong implications. In particular, the Poverty Gap Ratio is the only index in the popular Foster-Greer-Thorbecke family to satisfy it.
    Keywords: relative poverty, absolute poverty, income poverty, poverty gap ratio
    Date: 2014–07–03
  9. By: DECANCQ, Koen (University of Antwerp, Katholieke Universiteit Leuven and Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium); FLEURBAEY, Marc (Princeton University); SCHOKKAERT, Erik (Katholieke Universiteit Leuven; Université catholique de Louvain, CORE, Belgium)
    Abstract: Individual well-being depends not only on income but also on other dimensions of life, such as health, the quality of social relations and of the environment, employment, and job satisfaction. In this paper we survey the economic literature on how to construct such overall measures of well-being. We distinguish three approaches: the capability (and functionings) approach, the use of subjective life satisfaction measures and the calculation of equivalent incomes. We discuss the normative assumptions underlying these three approaches, focusing on two issues: the degree to which individual preferences are respected and where in each approach the boundaries of individual responsibility are drawn. We compare the measurement of inequality in well-being with the use of multidimensional inequality measures. We illustrate the general theoretical issues in three domains of application: measuring the effects of household size and composition in the literature on equivalence scales, valuing publicly provided goods and services, and making international comparisons of well-being involving international PPP comparisons.
    Date: 2014–06–11
  10. By: Romina Boarini; Alexandre Kolev; Allister McGregor
    Abstract: A wide range of voices around the world have stressed the need to understand development as a multidimensional phenomenon that involves and affects many aspects of people’s lives. Increasingly, it is recognised that current well-being and its long-term sustainability are the ultimate goals of development and that these notions better capture the human experience of development. The objectives of this paper are to explain why well-being matters in countries at different levels of development and to address measurement challenges in the context of developing countries. These objectives are pursued in four main steps. First, the paper offers a conception of well-being and illustrates its relevance in different development contexts. Second, it describes briefly how the measurement of well-being is implemented under the OECD Better Life Initiative for OECD countries. Third, it proposes ways in which the OECD framework can be adapted to specific development contexts and thereby made more universal, by suggesting relevant well-being dimensions and indicators that could be used to measure well-being in developing countries. Finally, it discusses the possible implications of the adapted framework for OECD work in developing countries, in particular its possible use in the Multi-Dimensional Country Reviews conducted by the OECD Development Centre for a range of non OECD countries.<BR>De nombreuses voix à travers le monde se sont élevées pour affirmer la nécessité d’appréhender le développement en tant que phénomène pluridimensionnel qui implique et influence de nombreux aspects de la vie des citoyens. De plus en plus il est reconnu que le bien être actuel et sa durabilité sur le long terme est l’objectif ultime du développement et que cette notion est mieux à même de prendre en compte l’expérience humaine du développement. Les objectifs de ce document sont d’expliquer pourquoi la notion de bien être est importante pour les pays quel que soit leur niveau de développement, et de se pencher sur les défis liés à la mesure du bien-être dans les pays en voie de développement. Ces objectifs sont poursuivis à travers quatre étapes. Premièrement, ce document propose une conception du bien-être et montre pourquoi cette conception est pertinente dans des contextes de développement différents.<P> Deuxièmement, il passe brièvement en revue la manière dont la mesure du bien-être est effectuée dans le cadre de l’Initiative de l’OCDE pour une vie meilleure au sein des pays de l’OCDE. Troisièmement, il propose des pistes pour adapter le cadre de l’OCDE à des contextes de développement spécifiques, le rendant de fait plus universel, en présentant des dimensions du bien-être et des indicateurs qui pourraient être utilisés pour mesurer le bien-être dans les pays en voie de développement. Finalement, ce document discute les implications possibles du cadre ajusté pour le travail de l’OCDE dans les pays en développement, en particulier son utilisation dans les Revues pays multidimensionnelles réalisées par le Centre de développement de l’OCDE dans les pays non OCDE.
    Keywords: development, well-being, développement, bien-être
    JEL: I30
    Date: 2014–11–26

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