nep-hap New Economics Papers
on Economics of Happiness
Issue of 2015‒08‒19
thirteen papers chosen by
Viviana Di Giovinazzo
Università degli Studi di Milano-Bicocca

  1. A Life-Span Perspective on Life Satisfaction By Paula Thieme; Dennis A.V. Dittrich
  2. Measuring Renewable Energy Externalities: Evidence from Subjective Well-Being Data By Charlotte von Möllendorff; Heinz Welsch
  3. Drivers of the change in social welfare By Mikulas Luptácik; Eduard Nežinský; Martin Lábaj
  4. On the Ethics of Redistribution By Chari, V. V.; Phelan, Christopher
  5. Adaptation and the Easterlin Paradox By Andrew E. Clark
  6. Pollution, Unequal Lifetimes and Fairness By Grégory Ponthière
  7. Facilitating collusion by exchanging non-verifiable sales reports By David Spector
  8. SWB as a Measure of Individual Well-Being By Andrew E. Clark
  9. Are Comparisons Luxuries? Subjective Poverty and Positional Concerns in Indonesia By Jinan Zeidan
  10. Moral Capital in the Twenty-First Century By Acs, Zoltan J.
  11. Do Social Networks Improve Chinese Adults' Subjective Well-being? By Lei, Xiaoyan; Shen, Yan; Smith, James P.; Zhou, Guangsu
  12. (Mis-)Predicted Subjective Well-Being Following Life Events By Odermatt, Reto; Stutzer, Alois
  13. Keeping up with the e-Joneses: Do online social networks raise social comparisons? By Sabatini, Fabio; Sarracino, Francesco

  1. By: Paula Thieme; Dennis A.V. Dittrich
    Abstract: The German population is ageing due to decreasing birth rates and increasing life expectancy. To sustain the German pension system, legal retirement age is increased step by step to 67 years. This raises questions about how to enable and motivate older individuals to work that long. Hence, it is important to understand whether they represent a homogeneous group that can be addressed through specific measures and instruments. Life-span theory points to systematic changes as well as increased heterogeneity with age. For example, work motivation does not generally decline with age but becomes increasingly task-specific, depending on changing life goals and individual adaptation processes in adult development. In this empirical study we analyse age heterogeneity with regard to current life satisfaction and life satisfaction domains (measured as satisfaction with work, income, family and health) that represent personal utilities individuals strive for. For our analysis we use data collected as part of a representative German longitudinal data study (SOEP). We find increasing heterogeneity in current life satisfaction, satisfaction with work, family life, and health with age. Thus, common mean level analyses on age effects yield only limited informative value. The heterogeneity of older adults should be taken into account when motivating and developing older workers.
    Keywords: Life satisfaction, heterogeneity, life-span, older workers, ageing
    Date: 2015
  2. By: Charlotte von Möllendorff; Heinz Welsch
    Abstract: Electricity from renewable sources avoids disadvantages of conventional power generation but often meets with local resistance due to visual, acoustic, and odor nuisance. We use representative panel data on the subjective well-being of 46,678 individuals in Germany, 1994-2012, for identifying and valuing the local externalities from solar, wind and biomass plants in respondents’ postcode area and adjacent postcode areas. We find significant well-being externalities of all three technologies that differ with regard to their temporal and spatial characteristics. The monetary equivalent of 1 MW capacity expansion is estimated to be in the range of 0.3-0.7 percent of per capita income.
    Keywords: renewable energy, local externality, subjective well-being, life satisfaction, non-market valuation
    JEL: Q42 D62 I31 Q51
    Date: 2015
  3. By: Mikulas Luptácik; Eduard Nežinský; Martin Lábaj
    Abstract: Recent developments in the political, scientific and economic debate on the topic of the project proposal in Area 2: "The impact of ecological sustainability on growth and employment is investigated, as it will have important repercussions on econonmic policy and welfare, many of them not reflected in traditional GDP measures and in economic policy" suggest that it is of critical importance to develop and to use new approaches able to compare policy scenarios for their effectiveness, their efficiency, their enforceability and other dimensions. It is a urgent need for quantitative methodology able to assess the relative performance of different policy scenarios taking into account their long-term economic, social and environmental impacts. The methodology based on Data Envelopment Analysis (DEA) and Multi Criteria Analysis (MCA) provides a promising comparison framework. The objective of this part of research is not solely to discuss and comment on different scenario and policy outcomes provided by WP205, but to extract useful information from the phase where proposed and simulated policy scenarios are compared. In particular, we are interested in incorporating the economic, environmental and social dimensions of the positive and negative impacts of each policy scenario. As shown in the paper by Boseth-Buchner (2009) this methodology allows "to bridge the gap between the simulation phase, in which long-run efects of policies are mimicked, and the valuation phase, in which usually a coherent cost benefit analysis framework is adopted" (p. 1342). In difference to the standard application of DEA for the ex-post performance assessment in the proposed approach DEA can be used for ex-ante assessment of different policy scenarios. DEA models combined with MCA, in particular with Analytic Hierarchy Process (AHP) incorporating human judgements provides an useful instrument to analyse the impact of different policy preferences and strategies that appear to be crucial for the increasing well-being of the population. As a consequence, the proposed approach can provide a very beneficial contribution to the project as a whole and in particular to one of t
    Keywords: Academic research, Beyond GDP, Challenges for welfare system, Economic strategy, European economic policy, Research, Sustainable growth, Welfare reform, Welfare state
    JEL: C61 D69 E01 E61 O11 O47 Q56
    Date: 2015–07
  4. By: Chari, V. V. (Federal Reserve Bank of Minneapolis); Phelan, Christopher (Federal Reserve Bank of Minneapolis)
    Abstract: Analysts of optimal policy often advocate for redistributive policies within developed economies using a behind-the-veil-of-ignorance criterion. Such analyses almost invariably ignore the effects of these policies on the well-being of people in poor countries. We argue that this approach is fundamentally misguided because it violates the criterion itself.
    Date: 2015–07–29
  5. By: Andrew E. Clark (PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics)
    Abstract: Two behavioural explanations of the Easterlin Paradox are commonly advanced. The first appeals to social comparisons, whereby individual i compares her income (Yit) to a comparison income level earned by some other individual or group j (Y*jt). The second explanation is that of adaptation to higher levels of income. This is of the same nature, but here the individual’s current income is compared to her own income in the past (i.e. Yit is compared to Yit-τ, for some positive value or values of τ). The first of these explanations has attracted far more empirical attention than has the second. This is probably for data-availability reasons, as the investigation of the latter requires panel information. There is also a suspicion that large changes in Yit might be accompanied by a movement in some other variable that is also correlated with subjective well-being. We here review the empirical evidence that individuals do indeed compare current to past income, and then whether individuals adapt in general to aspects of their economic and social life. Last, we ask whether adaptation is in fact a viable explanation of the Easterlin Paradox.
    Date: 2015–02
  6. By: Grégory Ponthière (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12, PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics)
    Abstract: Pollution is a major cause of mortality, leading to substantial inequalities in lifetime well-being across individuals. This paper characterizes the optimal level of pollution in a two-period OLG economy where pollution deteriorates survival conditions. We compare two long-run social optima: on the one hand, the average utilitarian optimum, where the long-run average well-being is maximized, and, on the other hand, the ex post egalitarian optimum, where the well-being of the worst-o¤ at the stationary equilibrium is maximized. It is shown that the ex post egalitarian optimum involves a higher level of pollution in comparison with the utilitarian optimum. This result is robust to introducing health expenditures in the survival function. Finally, we examine the decentralization of those two social optima, and we compare the associated optimal taxes on capital income aimed at internalizing the pollution externality.
    Date: 2014–12
  7. By: David Spector (PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics)
    Abstract: A number of collusive agreements involve the exchange of self-reported sales data between firms, which use them to monitor compliance with a target market share allocation. This paper shows that such communication between competitors may facilitate collusion even if all private information becomes public after a delay. The exchange of sales information may allow firms to implement incentive-compatible market share reallocation mechanisms after unexpected swings, limiting the recourse to price wars as a tool for mutual disciplining. In some cases, efficient collusion cannot occur unless firms are able to engage in such communication.
    Date: 2015–02
  8. By: Andrew E. Clark (PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics)
    Abstract: There is much discussion about using subjective well-being measures as inputs into a social welfare function, which will tell us how well societies are doing. But we have (many) more than one measure of subjective well-being. I here consider examples of the three of the main types (life satisfaction, affect, and eudaimonia) in three European surveys. These are quite strongly correlated with each other, and are correlated with explanatory variables in pretty much the same manner. I provide an overview of a recent literature which has compared how well different subjective well-being measures predict future behaviour, and address the issue of the temporality of well-being measures, and whether they should be analysed ordinally or cardinally.
    Date: 2015–03
  9. By: Jinan Zeidan (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université)
    Abstract: We explore (i) the usual determinants of happiness in Indonesia, with a special focus on the role of various measures of absolute income; (ii) the presence of relativistic concerns or positive external effects in shaping attitudes to subjective well-being; and (iii) whether this potential effect changes sign with income level. Additional evidence offered by our investigation relates to the effect of past income levels as well as to that of aspirations. In line with other literature from poor contexts, we find that the subjective well-being of Indonesians is positively affected by the comparison with the income of people around them. This positive influence is unambiguously more important for the poor than for the rich. This pattern is consistent through different measures of well-being and holds also when accounting for past income levels, and lagged income expectations.
    Date: 2015–02
  10. By: Acs, Zoltan J. (London School of Economics)
    Abstract: This paper recasts Piketty’s Capital in the Twenty-First Century in light of Acs’ Why Philanthropy Matters: How the Wealthy Give and What It Means for Our Economic Well-Being. Philanthropy matters in this debate because, as moral capital, philanthropy offers an alternative solution to the Piketty conundrum, and it does so without relying exclusively on a wealth tax and government intervention. Moral capital over the centuries strengthened both capitalism and democracy by investing in opportunity (slavery, suffrage and civil rights), which in turn leads to long-term economic growth and greater equality. By focusing on university research—which is critical in promoting technological innovation, economic equality, and economic security—that creates a large, well-functioning middle class (The Economist, March 2015), moral capital represents the missing link in the theory of capitalism development.
    Keywords: philanthropy; competition; education; opportunity; entrepreneurship; innovation; inequality; Piketty
    JEL: J24 L26 O20 P16
    Date: 2015–08–10
  11. By: Lei, Xiaoyan (Peking University); Shen, Yan (Peking University); Smith, James P. (RAND); Zhou, Guangsu (Peking University)
    Abstract: This paper studies relationships between social networks, health and subjective well-being (SWB) using nationally representative data of the Chinese Population – the Chinese Family Panel Studies (CFPS). Our data contain SWB indicators in two widely used variants – happiness and life-satisfaction. Social network variables used include kinship relationships measured by marital status, family size, and having a genealogy; ties with friends/relatives/neighbors measured by holiday visitation, frequency of contacts, and whether and value gifts given and received; total number and time spent in social activities, and engagement in organizations including the communist party, religious groups, and other types. We find that giving and receiving gifts has a larger impact on SWB than either just giving or receiving them. Similarly the number of friends is more important than number of relatives, and marriage is associated with higher levels of SWB. Time spent in social activities and varieties of activities both matter for SWB but varieties matters more. Participation in organization is associated with higher SWB across such diverse groups as being a member of the communist party or a religious organization. China represents an interesting test since it is simultaneously a traditional society with long-established norms about appropriate social networks and a rapidly changing society due to substantial economic and demographic changes. We find that it is better to both give and receive, to engage in more types of social activities, and that participation in groups all improves well-being of Chinese people.
    Keywords: China, social networks, subjective well-being
    JEL: O10 O53
    Date: 2015–07
  12. By: Odermatt, Reto (University of Basel); Stutzer, Alois (University of Basel)
    Abstract: The correct prediction of how alternative states of the world affect our lives is a cornerstone of economics. We study how accurate people are in predicting their future well-being when facing major life events. Based on individual panel data, we compare people's forecast of their life satisfaction in five years' time to their actual realisations later on. This is done after the individuals experience widowhood, marriage, unemployment or disability. We find systematic prediction errors that are at least partly driven by unforeseen adaptation.
    Keywords: adaptation, life satisfaction, life events, projection-bias, subjective well-being, utility prediction, unemployment
    JEL: D03 D12 D60 I31
    Date: 2015–08
  13. By: Sabatini, Fabio; Sarracino, Francesco
    Abstract: Online social networks such as Facebook disclose an unprecedented volume of personal information amplifying the occasions for social comparisons. We test the hypothesis that the use of social networking sites (SNS) increases people’s dissatisfaction with their income. After addressing endogeneity issues, our results suggest that SNS users have a higher probability to compare their achievements with those of others. This effect seems stronger than the one exerted by TV watching, it is particularly strong for younger people, and it affects men and women in a similar way.
    Keywords: social networks; social networking sites; social comparisons; satisfaction with income; relative deprivation.
    JEL: D3 D31 O33 Z13
    Date: 2015–07–31

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