nep-hap New Economics Papers
on Economics of Happiness
Issue of 2015‒04‒11
five papers chosen by

  1. A fixed effects ordered choice model with flexible thresholds with an application to life-satisfaction By Yaman, F.; Cubí‐Mollá, P.
  2. Creative Destruction and Subjective Wellbeing By Philippe Aghion; Ufuk Akcigit; Angus Deaton; Alexandra Roulet
  3. What Makes Mexicans Happy? By Valéry Dugain; Eduardo Olaberriá
  4. Does the choice of well-being measure matter empirically? An illustration with German data By DECANCQ, Koen; NEUMANN, Dirk
  5. Sleep Duration and Life Satisfaction By Alan T. Piper

  1. By: Yaman, F.; Cubí‐Mollá, P.
    Abstract: In many contexts reported outcomes in a rating scale are modeled through the existence of a latent variable that separates the categories through thresholds. The literature has not been able to separate the effect of a variable on the latent variable from its effect on threshold parameters. We propose a model which incorporates (1) individual fixed effects on the latent variable, (2) individual fixed effects on the thresholds and (3) threshold shifts across time depending on observable. Importantly, the latent variable and the threshold specifications can include common variables. In order to illustrate the estimator, we apply it to a model of life satisfaction using the GSOEP dataset. We demonstrate that important differences can arise depending on the choice of the model. Our model suggests that threshold shifts are statistically and quantitatively important. Factors which increase reported life-satisfaction are due both to positive effects on the latent variable AND to shifting thresholds to the left, while factors which decrease reported life satisfaction are due to negative effects on the latent variable AND to shifting thresholds to the right.
    Keywords: Ordered choice; fixed effects; subjective well-being; life-satisfaction
  2. By: Philippe Aghion; Ufuk Akcigit; Angus Deaton; Alexandra Roulet
    Abstract: In this paper we analyze the relationship between turnover-driven growth and subjective wellbeing, using cross-sectional MSA level US data. We find that the effect of creative destruction on wellbeing is (i) unambiguously positive if we control for MSA-level unemployment, less so if we do not; (ii) more positive on future wellbeing than on current well-being; (iii) more positive in MSAs with faster growing industries or with industries that are less prone to outsourcing; (iv) more positive in MSAs within states with more generous unemployment insurance policies.
    JEL: I31 J63 J65 O33 O38 Z19
    Date: 2015–04
  3. By: Valéry Dugain; Eduardo Olaberriá
    Abstract: The growing literature studying the determinants of subjective wellbeing find that Mexicans report, on average, levels of life satisfaction that are above what would be predicted by the available objective measures of well-being. This paradox raises the following question: Are the drivers of subjective well-being in Mexico different from the drivers in other countries? This paper tries to answer this question using data from the World Gallup Poll and Instituto Nacional de Estadísticas y Geografía (INEGI). In particular, it investigates if the impact that key objective measures of well-being have on life satisfaction is different in Mexico than in other countries. The results show that the drivers of life satisfaction are very similar to those in other countries. In particular, as in other countries, in Mexico income, education, health, job status and other individual characteristics are significantly associated with life satisfaction. These findings suggest that the higher average level of life satisfaction in Mexico is probably related to unobserved country characteristics. This Working Paper relates to the 2015 OECD Economic Survey of Mexico (<P>Qu'est-ce qui rend les Mexicains heureux?<BR>Les déterminants du bien-être subjectif indiquent que les Mexicains déclarent, en moyenne, des niveaux de satisfaction de la vie qui sont au-dessus de ce qui serait prévu par des mesures objectives du bien-être. Ce paradoxe soulève la question suivante: les facteurs du bien-être subjectif au Mexique sont-ils différents dans les autres pays? Cet article tente de répondre à cette question en utilisant des données de la World Gallup Poll et du Instituto Nacional de Estadísticas y Geografía (INEGI). En particulier, il examine si l'impact des mesures objectives du bien-être sur la satisfaction de la vie est différent au Mexique par rapport à d'autres pays. Les résultats montrent que les facteurs de satisfaction de vie sont très semblables à ceux des autres pays. Au Mexique, comme dans d'autres pays, le revenu, l'éducation, la santé, la situation professionelle et d'autres caractéristiques individuelles sont significativement associées à la satisfaction de vie. Ces résultats suggèrent que le niveau moyen plus élevé de satisfaction de vie au Mexique est sans doute lié à des caractéristiques de pays non observées, comme des obstacles culturels ou linguistiques. Ce document de travail économique se rapporte à l'Étude économique 2015 de l'OCDE sur le Mexique ( ique-mexique.htm).
    Keywords: health, subjective well-being, income, life satisfaction, employment status, statut d'emploi, satisfaction de la vie, bien-être subjectif, revenu, santé
    JEL: D6 I3 N3 O1 O4
    Date: 2015–03–27
  4. By: DECANCQ, Koen (University Antwerp); NEUMANN, Dirk (Université catholique de Louvain, CORE, Belgium)
    Abstract: We discuss and compare five measures of individual well-being, namely income, an objective composite well-being index, a measure of subjective well-being, equivalent income, and a well-being measure based on the von Neumann-Morgenstern utilities of the individuals. After examining the information requirements of these measures, we illustrate their implementation using data from the German Socio-Economic Panel (SOEP) for 2010. We find sizeable differences in the characteristics of the individuals identified as worst off according to the different well-being measures. Less than 1% of the individuals belong to the bottom decile according to all five measures. Moreover, the measures lead to considerably different well-being rankings of the individuals. These findings highlight the importance of the choice of well-being measure for policy making.
    Keywords: income, composite well-being index, life satisfaction, equivalent income, von Neumann-Morgenstern utility function, worst off, Germany
    JEL: D31 D63 I30
    Date: 2014–10–31
  5. By: Alan T. Piper
    Abstract: Sleep is an important part of life, with an individual spending an estimated 32 years of her life asleep. Despite this importance, little is known about life satisfaction and sleep duration. Using German panel data, it is shown that sleep is an important factor for life satisfaction and that maximal life satisfaction is associated with about eight hours of sleep on a typical weekday. This figure represents, on average, an hour more than people currently sleep suggesting that more sleep would lead to a higher reported satisfaction with life.
    Keywords: Sleep, Life Satisfaction, SOEP, fixed effects
    JEL: C23 D10 I31
    Date: 2015

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.