nep-hap New Economics Papers
on Economics of Happiness
Issue of 2015‒03‒22
eight papers chosen by

  1. Economic shocks and subjective well-being : evidence from a quasi-experiment By Hariri,Jacob Gerner; Bjørnskov,Christian; Justesen,Mogens K.
  2. The Internet as a Data Source for Advancement in Social Sciences By Askitas, Nikos; Zimmermann, Klaus F.
  3. What Do Subjective Assessments of Financial Well-Being Reflect? By Steven A. Sass; Anek Belbase; Thomas Cooperrider; Jorge D. Ramos-Mercado
  4. Poverty Profiles and Well-Being: Panel Evidence from Germany By Andrew E. Clark; Conchita D'Ambrosio; Simone Ghislandi
  5. Over Indebtedness and Depression: Sad Debt or Sad Debtors? By Daniel Hojman; Alvaro Miranda; Jaime Ruiz-Tagle
  6. A Nudge in the Dark. An artefactual experiment investigating the effects of priming in the presence of distractions By Michael Sanders
  7. The role of proximity and social comparisons on subjective well-being By Elena Bárcena-Martín; Cortés Aguilar Alexandra; Ana I. Moro Egido
  8. Political Stability and Democratic Governance. A Panel Data Analysis. By Georgiou, Militiades N.; Kyriazis, Nicholas; Economou, Emmanouel/Marios/Lazaros

  1. By: Hariri,Jacob Gerner; Bjørnskov,Christian; Justesen,Mogens K.
    Abstract: This article examines how economic shocks affect individual well-being in developing countries. Using the case of a sudden and unanticipated currency devaluation in Botswana as a quasi-experiment, the article examines how this monetary shock affects individuals'evaluations of well-being. This is done by using microlevel survey data, which?incidentally?were collected in the days surrounding the devaluation. The chance occurrence of the devaluation during the time of the survey enables us to use pretreatment respondents, surveyed before the devaluation, as approximate counterfactuals for post-treatment respondents, surveyed after the devaluation. Estimates show that the devaluation had a large and significantly negative effect on individuals'evaluations of subjective well-being. These results suggest that macroeconomic shocks, such as unanticipated currency devaluations, may have significant short-term costs in the form of reductions in people's sense of well-being.
    Keywords: Economic Theory&Research,Debt Markets,Currencies and Exchange Rates,Fiscal&Monetary Policy,Emerging Markets
    Date: 2015–03–10
  2. By: Askitas, Nikos (IZA); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: This paper advocates the use of Internet data for social sciences with a special focus on human resources issues. It discusses the potentials and challenges of Internet data for social sciences and presents a selection of the relevant literature to establish the wide spectrum of topics, which can be reached. Such data represent a large and increasing part of everyday life, which cannot be measured otherwise. They are timely, perhaps even daily following the factual process, they typically involve large numbers of observations, and they allow for flexible conceptual forms and experimental settings. Internet data can successfully be applied to a very wide range of human resource issues including forecasting (e.g. of unemployment, consumption goods, tourism, festival winners and the like), nowcasting (obtaining relevant information much earlier than through traditional data collection techniques), detecting health issues and well-being (e.g. flu, malaise and ill-being during economic crises), documenting the matching process in various parts of individual life (e.g. jobs, partnership, shopping), and measuring complex processes where traditional data have known deficits (e.g. international migration, collective bargaining agreements in developing countries). Major problems in data analysis are still unsolved and more research on data reliability is needed. Current research is highly original but also exploratory and premature. Our article reviews the current attempts in the literature to incorporate Internet data into the mainstream of scholarly empirical research and guides the reader through this Special Issue. We provide some insights and a brief overview of the current state of research.
    Keywords: World Wide Web, web data, internet data, forecasting, human resources and the internet
    JEL: J00 C80 C81 C83
    Date: 2015–02
  3. By: Steven A. Sass; Anek Belbase; Thomas Cooperrider; Jorge D. Ramos-Mercado
    Abstract: Subjective financial assessments are used by social scientists as a measure of financial well-being and by households as the basis for action. Financial well-being, however, increasingly requires workers to build-up savings to meet hard-to-see future needs, specifically retirement, their children’s education, and paying off student loans. This paper analyzes data from the FINRA Investor Education Foundation’s 2012 Financial Capability Survey to test whether subjective financial assessments 1) primarily reflect day-to-day, rather than distant, financial concerns; 2) increasingly reflect distant concerns if the household’s day-to-day finances are in reasonably good shape; and 3) increasingly reflect distant concerns if the worker is financially literate. The paper found that: * Subjective financial assessments primarily reflect day-to-day conditions. * This remains the case even if the household’s day-to-day finances are in reasonably good shape. * Financial literacy enhances sensitivity to the lack of a retirement plan and having a mortgage greater than the value of one’s house, but it has no noticeable effect on sensitivity to life and medical insurance deficits, having an inactive retirement plan, not saving for college, or student debt burdens. The policy implications of the findings are: * Subjective financial assessments have become a poor measure of financial well-being. * Workers by themselves cannot be expected to devote much effort to addressing distant deficits. * Initiatives to improve well-being must raise awareness – or compensate for the lack of awareness – of hard-to-see distant future deficits.
    Date: 2015–03
  4. By: Andrew E. Clark; Conchita D'Ambrosio; Simone Ghislandi
    Abstract: We consider the link between poverty and subjective well-being, and focus in particular on the role of time. We use panel data on 49,000 individuals living in Germany from 1992 to 2012 to uncover three empirical relationships. First, life satisfaction falls with both the incidence and intensity of contemporaneous poverty. Second, poverty scars: those who have been poor in the past report lower life satisfaction today, even when out of poverty. Last, the order of poverty spells matters: for a given number of years in poverty, satisfaction is lower when the years are linked together. As such, poverty persistence reduces well-being. These effects differ by population subgroups.
    Keywords: Income, poverty, subjective well-being, SOEP
    JEL: I31 I32 D60
    Date: 2015
  5. By: Daniel Hojman; Alvaro Miranda; Jaime Ruiz-Tagle
    Abstract: In the last decades, consumer debt experienced a marked increase in the United States, Latin America and other emerging countries, spurring a debate about the real costs and benefits of household credit. This paper explores the psychological costs of over indebtedness. Using a unique dataset with detailed health and balance sheet information of a large sample of Chilean households we construct depression measures based on a questionnaire used in standardized medical diagnosis. We find causal evidence that over indebtedness increases depression and that the effect is large, comparable to half the effect of the loss of a family member. Most of the impact seems to be associated with non- mortgage debt -primarily consumer credit supplied by large retail chains- or late mortgage payments. We explore some of the behavioral and cognitive channels that make over indebtedness psychologically harmful. The probability of over indebtedness is found to be higher for individuals that exhibit self-regulation problems (gambling, smoking, drinking), leading to higher depression. This is a measure of the cost of debt explained by impulsivity in terms of an objective psychological well-being indicator. Individuals with higher numeracy skills are also associated with higher over indebtedness but -ceteris paribus- their overall depression measures are lower. Our findings suggest that self-control and cognitive abilities play a role in explaining sad debt.
    Date: 2013–11
  6. By: Michael Sanders
    Abstract: “Nudges" - small, usually cheap, interventions to alter the behaviour of individuals to improve their “health, wealth or happiness", are increasingly popular with governments and have thus far played a large role in the coalition government's attempts to encourage pro-social behaviour. The power of many of these nudges, such as the effect of priming in a trust-game type scenario, has been tested widely in the lab, but have proven difficult to replicate in the field. Although the laboratory allows a sterile environment, this is not always desirable - the real world is not sterile, and there are often many different factors competing for an individual's attention. We present the results of an experiment conducted during the course of a busy public engagement event at the University of Bristol, where members of the public, with little or no knowledge of economic theory, were invited to take part in a game during which they received incidental priming. We find that although the effect of...
    Date: 2014–07
  7. By: Elena Bárcena-Martín (Dpto. Estadística y Econometría, University of Málaga.); Cortés Aguilar Alexandra (Escuela de Economía y Administración, Universidad Industrial de Santander.); Ana I. Moro Egido (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: Using the German Socio-Economic Panel, we analyze the importance of modeling social comparisons to determine their effect on subjective well-being. The first contribution is the consideration of social comparison measures, which assume that individuals compare themselves to each and all the other individuals along the income distribution and where proximity is a crucial issue in the comparisons. The second contribution is the inclusion of social contacts and values as an influence on the effect of social comparisons on subjective well-being. Interestingly, our results confirm that individuals’ subjective wellbeing is affected by their comparisons with others above and below themselves in the distribution, and the relevant role of proximity. Additionally, we conclude that social and cultural capital modify the effect of social comparisons and proximity on subjective well-being.
    Date: 2013–10–22
  8. By: Georgiou, Militiades N.; Kyriazis, Nicholas; Economou, Emmanouel/Marios/Lazaros
    Abstract: In the present paper we undertake to link democracy with a set of indicators for economic freedom and financial crises, using panel data analysis. The sample covers annually the period 2000-2012 for the EU, the USA and Japan. The results point out, that political stability is positively related to the set of economic freedom indicators and negatively to financial crises, because greater economic freedom influences positively investment and economic growth, while financial crises, which lead to austerity policies, which again lead to recession-depression, increases dissatisfaction of citizens with the working of democracy (Georgiou, 2011) and thus, to the rise of extremist parties. Our findings support the idea that democratic stability is linked to economic stability and growth and vice-versa.
    Keywords: Democracy, economic freedom, financial crisis, panel data analysis.
    JEL: C23 E10 N40
    Date: 2015–03–15

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