nep-hap New Economics Papers
on Economics of Happiness
Issue of 2015‒07‒11
seven papers chosen by

  1. Rising Aspirations Dampen Satisfaction By Clark, Andrew E.; Kamesaka, Akiko; Tamura, Teruyuki
  2. Adaptation to Poverty in Long-Run Panel Data By Clark, Andrew E.; D'Ambrosio, Conchita; Ghislandi, Simone
  3. Labor Supply and Productivity Responses to Non-Salary Benefits: Do They Work? If So, at What Level Do They Work Best? By Spencer, Marilyn; Gevrek, Deniz; Chambers, Valrie; Bowden, Randall
  4. Remittances and Relative Concerns in Rural China By Akay, Alpaslan; Bargain, Olivier; Giulietti, Corrado; Robalino, Juan David; Zimmermann, Klaus F.
  5. Do more of those in misery suffer from poverty, unemployment or mental illness? By Sarah Flèche; Richard Layard
  6. Revisiting the Evidence for a Cardinal Treatment of Ordinal Variables By Carsten Schröder; Shlomo Yitzhaki
  7. Job Satisfaction of Wage and Self-Employed workers. Do preferences make a difference? By Cueto, Begona; Pruneda, Gabriel

  1. By: Clark, Andrew E.; Kamesaka, Akiko; Tamura, Teruyuki
    Abstract: It is commonly-believed that education is a good thing for individuals. Yet its correlation with subjective well-being is most often only weakly positive, or even negative, despite the many associated better individual-level outcomes We here square the circle using novel Japanese data on happiness aspirations. If reported happiness comes from a comparison of outcomes to aspirations, then any phenomenon raising both at the same time will have only a muted effect on reported well-being. We find that around half of the happiness effect of education is cancelled out by higher aspirations, and suggest a similar dampening effect for income.
    Keywords: education; satisfaction; aspirations; income
    Date: 2015–05
  2. By: Clark, Andrew E.; D'Ambrosio, Conchita; Ghislandi, Simone
    Abstract: We consider the link between poverty and subjective well-being, and focus in particular on potential adaptation to poverty. We use panel data on almost 54,000 individuals living in Germany from 1985 to 2012 to show first that life satisfaction falls with both the incidence and intensity of contemporaneous poverty. We then reveal that there is little evidence of adaptation within a poverty spell: poverty starts bad and stays bad in terms of subjective well-being. We cannot identify any cause of poverty entry which explains the overall lack of poverty adaptation.
    Keywords: income, poverty, subjective well-being, adaptation, SOEP
    Date: 2015–05
  3. By: Spencer, Marilyn (Texas A&M University Corpus Christi); Gevrek, Deniz (Texas A&M University Corpus Christi); Chambers, Valrie (Stetson University); Bowden, Randall (Texas A&M University Corpus Christi)
    Abstract: This study explores the impact of a particular low marginal-cost employee benefit on employees' intended retention and performance. By utilizing a unique data set constructed by surveying full-time faculty and staff members at a public university in the United States, we study the impact of this employee benefit on faculty and staff performance and retention. We focus on the impact of reduction in dependent college tuition at various levels on employees' intentions to work harder and stay at their current job by using both OLS and Ordered Probit models. We also simulate the direct opportunity cost (reduction in revenue) in dollars and as a percent of total budgeted revenue to facilitate administrative decision making. The results provide evidence that for institutions where employee retention and productivity are a priority, maximizing or offering dependent college tuition waiver may be a relatively low-cost benefit to increase intended retention and productivity. In addition, the amount of the tuition waiver, number of dependents and annual salary are statistically significant predictors of intended increased productivity and intent to stay employed at the current institution. Employee retention and productivity is a challenge for all organizations. Although pay, benefits, and organizational culture tend to be key indicators of job satisfaction, little attention is given to specific types of benefits. This study is the first comprehensive attempt to explore the relationship between the impact of this low-cost employee benefit and employee performance and retention in a higher education institution in the United States.
    Keywords: higher education, retention, employee satisfaction, productivity, job satisfaction, fringe benefits
    JEL: J22 J32 J45 M52
    Date: 2015–06
  4. By: Akay, Alpaslan (University of Gothenburg); Bargain, Olivier (University of Aix-Marseille II); Giulietti, Corrado (IZA); Robalino, Juan David (Cornell University); Zimmermann, Klaus F. (IZA and University of Bonn)
    Abstract: The paper investigates the impact of remittances on the relative concerns of households in rural China. Using the Rural to Urban Migration in China (RUMiC) dataset we estimate a series of well-being functions to simultaneously explore the relative concerns with respect to income and remittances. Our results show that although rural households experience substantial utility loss due to income comparisons, they gain utility by comparing their remittances with those received by their reference group. In other words, we find evidence of a "status-effect" with respect to income and of a "signal-effect" with respect to remittances. The magnitudes of these two opposite effects are very similar, implying that the utility reduction due to relative income is compensated by the utility gain due to relative remittances. This finding is robust to various specifications, controlling for the endogeneity of remittances and selective migration, as well as a measure of current migrants' net remittances calculated using counterfactual income and expenditures.
    Keywords: positional concerns, remittances, subjective well-being
    JEL: C90 D63
    Date: 2015–06
  5. By: Sarah Flèche; Richard Layard
    Abstract: Studies of deprivation usually ignore mental illness. This paper uses household panel data from the USA, Australia, Britain and Germany to broaden the analysis. We ask first how many of those in the lowest levels of life-satisfaction suffer from unemployment, poverty, physical ill health, and mental illness. The largest proportion suffer from mental illness. Multiple regression shows that mental illness is not highly correlated with poverty or unemployment, and that it contributes more to explaining the presence of misery than is explained by either poverty or unemployment. This holds both with and without fixed effects.
    Keywords: Mental health; life-satisfaction; wellbeing; poverty; unemployment
    JEL: I31 I32
    Date: 2015–06
  6. By: Carsten Schröder; Shlomo Yitzhaki
    Abstract: Well‐being (i.e., satisfaction, happiness) is a latent variable, impossible to observe directly. Hence, questionnaires ask people to grade their well‐being in different life domains. The most common practice—comparing well‐being by means of descriptive analysis or linear regressions—ignores that the underlying collected well‐being information is ordinal. If the well‐being function is ordinal, then monotonic transformations are allowed. We demonstrate that treating ordinal data by methods intended to be used for cardinal data may give an incorrect impression of a robust result. Particularly, we derive the conditions under which the use of cardinal method to an ordinal variable gives an illusionary sense of robustness, while in fact one can reverse the conclusion reached by using an alternative cardinal assumption. The paper provides empirical applications.
    Keywords: satisfaction, well-being, ordinal, cardinal, dominance
    JEL: C18 C23 C25 I30 I31 I39
    Date: 2015
  7. By: Cueto, Begona; Pruneda, Gabriel
    Abstract: A large body of the literature on job satisfaction concludes that self-employed workers enjoy higher levels of job satisfaction than their wage counterparts. In this article, we test this statement by including as an explanatory variable the preference of individuals for either type of employment. Using data drawn from 24,187 workers in the Spanish private sector, our results show that only self-employed workers report higher satisfaction levels than salaried employees when they actually display a preference for self-employment. Our conclusions posit that it is not self-employment per se, but being on the type of employment of preference (wage or self-employment) what contributes to explain the greater job satisfaction of self-employed workers when compared to employees. Additionally, our findings provide evidence on the lower level of satisfaction of reluctant entrepreneurs when compared to latent entrepreneurs. In other words, self-employed workers who prefer salaried employment are less satisfied than employees who report a preference for self-employment.
    Keywords: job satisfaction; preferences; self-employment; wage employment; entrepreneurship
    JEL: J28 L26
    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.