nep-hap New Economics Papers
on Economics of Happiness
Issue of 2015‒11‒01
twelve papers chosen by
Viviana Di Giovinazzo
Università degli Studi di Milano-Bicocca

  1. Is subjective wellbeing related to trust? An empirical evidence of selected countries and regions. By Tiiu Paas; Veronika Kuranova
  2. The Happiness in Portuguese Cities By Diana Jesus; Marta Pais; Inês Lencastre; Regina Salvador; Paulo Reis; Letícia Lopes
  3. " I Even Met Happy Gypsies " : Life Satisfaction of Roma Youth in the Balkans By Laetitia Duval; François-­charles Wolff
  4. A Decomposition of Multidimensional Economic Well-being: an application to Spanish regions By Jesus Perez-Mayo; Carlos Díaz-Caro
  5. Commute time and subjective well-being in urban China By Nie, Peng; Sousa-Poza, Alfonso
  6. Macro and Micro Determinants of Well-being in European Regions from a Social Capital Perspective By Fernando Bruna; Isabel Neira; Marta Portela; Adela García-Aracil
  7. Measuring Health and Well-being of Young People in the Transfer Project By Tia Palermo; UNICEF Office of Research - Innocenti
  8. Poverty Transitions Among Older Households By Leah Achdut; Liema Davidovich; Rita Troitski
  9. Predicting GDP of 289 NUTS Regions in Europe with ?Subjective? Indicators for Human and Social Capital By Mikko Weckroth; Teemu Kemppainen; Jens F.L. Sørensen
  10. The Effect of Income on Subjective Well-Being: Evidence from the 2008 Economic Stimulus Tax Rebates By Marta Lachowska
  11. The asymmetric effect of expectations on subjective well-being By Marta Barazzetta
  12. When Place is Too Big: Happy Town and Unhappy Metropolis By Okulicz-Kozaryn Adam

  1. By: Tiiu Paas; Veronika Kuranova
    Abstract: Economic growth and improvement of citizens? wellbeing are obligate targets of economic, social and institutional development of all countries and their governments. At the same time empirical evidence often shows that economic growth and increase of people?s income do not always have outcomes indicating that individual?s wellbeing has been improved. There are several non-economic and economic determinants of subjective well-being and knowing them is unavoidable in order to formulate and achieve targets for improvement of people?s wellbeing.
    Keywords: subjective wellbeing; economic development; trust; institutions
    JEL: I30 D31 O52 O12
    Date: 2015–10
  2. By: Diana Jesus; Marta Pais; Inês Lencastre; Regina Salvador; Paulo Reis; Letícia Lopes
    Abstract: Happiness is an aspiration of every human being, and can also be a measure of social progress. Yet can one say that citizens are happy? If they are not, what if anything can be done about it? (Helliwell, Layard, & Sachs, 2013, p. 3) Understanding cities and citizenship has become a common place in today?s regional and urban policies. To be able to quantify - and understand - concepts such as urban quality of living, wellbeing and happiness is an urban planning major tool. But how does one measure an abstract concept such as happiness and how does one eventually use this knowledge in to plan and build our cities? According to much of the debate over happiness, the wellbeing or life quality have been centered on the role of income even if human capital levels play an important role in the happiness of cities too. (Florida, Mellander, & Rentfrow, 2013, p. 614) Therefore, to know what happiness is and what a happy city means it is necessary to plan a high quality city for all citizens. This paper seeks to enlighten how happy the Portuguese cities are and how this happiness is related to structural, social or economics features. As happiness is hard to define and is composed by several and common factors (life quality, economic, housing, demographic, education, mobility, environment or geographic criteria) it is necessary to grasp its comprehension. Hence, twenty Portuguese cities were selected and analyzed using twenty variables that influence happiness, both according to literature and to empirical evidence. The Portuguese Life Quality Index (PLQI) - set by DECO and results from 21 Portuguese cities 2011 data - , was used as the dependent variable, a major proxy of wellbeing and happiness. The independent variables were collected from several statistical sources (2009-2013). Statistical analysis was first conducted using the correlation coefficient to estimate interdependence between the life quality index and other variables. In second place, multiple regression analysis was used to identify which of the pre-selected independent variables impacts happiness the most. Correlation findings shows, opposite and surprising results taking into account literature previews and other countries? empirical, results. A negative and significant correlation (-0.514) between PLQI and wages levels suggests that it is in the low wages cities that people are happier. This and other unexpected results mean that further research is needed. Regressions findings confirm that housing variables explain about 44% of the variation in the PLQI. Overall, defining and measuring happiness is not an easy task. This paper results confirm that happiness is not only related with social, economic or structural features, but also comprehends a fourth dimension, cultural, environmental or even individual one.
    Keywords: Happiness index; Portugal; Cities
    Date: 2015–10
  3. By: Laetitia Duval (Imperial College London - Imperial College London); François-­charles Wolff (UN - Université de Nantes, INED - Institut national d'études démographiques)
    Abstract: Economic studies on the Roma population, which is the largest and the poorest ethnic minority in Europe, remain sparse due to the limited availability of appropriate micro level data. This paper provides a comparative analysis of life satisfaction between Roma and non-­‐Roma young adults aged between 15 and 24 using survey data collected from Serbia in 2010 and from Bosnia and Herzegovina in 2011. Results from raw answers show that young Roma living in settlements are less satisfied with life than non-­‐Roma. However, we find instead that the former group is more satisfied once we account for the fact that Roma have more disadvantaged characteristics on average. Also, Roma young adults expect a better life within one year compared to non-­‐Roma in Serbia while there is no difference in Bosnia and Herzegovina.
    Keywords: Life satisfaction,ethnicity,youth,Roma,Bosnia and Herzegovina,Serbia
    Date: 2015–10–22
  4. By: Jesus Perez-Mayo; Carlos Díaz-Caro
    Abstract: The aim of this paper is to analyze the evolution of well-being changes due to, on one side, the changes in the weighting scheme and, on the other, changes in the indicators along the time. An alternative methodology is proposed in this paper that allows one to decompose a multidimensional index of economic well-being by distinguishing such effects from some dimensions as adjusted consumption, real wealth, inequality and economic security. The analysis is performed between 2000 and 2010 for all the Spanish regions. The main results show the relevance of differentiating between both components of change.
    Keywords: well-being; decomposition; regional inequalities
    JEL: I31 I32
    Date: 2015–10
  5. By: Nie, Peng; Sousa-Poza, Alfonso
    Abstract: Using data from the 2010 China Family Panel Studies, this study investigates the association between commute time and subjective well-being in a sample of 16- to 65-year-old employees in urban China. We find evidence that a longer commute time is associated with lower levels of both life satisfaction and happiness, especially when the commute times are extreme (≥ 1 hour per day). A multiple mediation analysis further indicates that the relation between commute time and happiness is partially mediated by time spent on daily activities, particularly sleeping. We calculate the amount of income necessary to compensate an employee's loss in well-being at approximately 82 yuan per hour of commute time, implying that, in urban China, the annual loss of well-being amounts to around 10 billion yuan.
    Keywords: commute time,life satisfaction,happiness,urban China
    JEL: I31 J30 J33 R41
    Date: 2015
  6. By: Fernando Bruna; Isabel Neira; Marta Portela; Adela García-Aracil
    Abstract: During the last years, happiness has received an increasing attention in the empirical literatures of Psychology, Sociology and Economics. In addition, a growing number of studies have focused on social capital. Most of this research analyzes survey data on life satisfaction and/or happiness at the individual level, some of them study the regional and national happiness, alternatively, both micro and macro determinants of individual happiness can be jointly studied through multilevel (or hierarchical) modelling. The lack of geographically referenced data hampers the use of methodologies, which control space effects, without highlighting elements related to the territory. Few previous works have estimated spatial econometric models of happiness at the macro level, by aggregation for regions. This paper provides theoretical arguments to consider regional heterogeneity and interdependence when modelling the effects of social capital on life satisfaction and happiness. The novel hypothesis in this paper is that the impact of the individual endowments of social capital on individual happiness can be different depending on latent variables, such as a social and cultural environment, which are spatially defined. The goal of this paper is to analyse the hierarchical modelling of spatial and social factors conditioning the individual happiness of Europeans. The paper compares alternative multilevel specifications for personal wellbeing, including different effects and measures for the dependent and independent variables. Using individual European data from the ESS 2012, and following a multilevel approach, the paper focuses on studying whether models of happiness with random slopes are able to capture the regional spatial dependence that appears when the individual data is aggregated. The results of random slopes models are compared to those of alternative specifications previously proposed in the literature, such as the use of regional means. Moreover, the paper also analyses whether these models are able to capture the residual spatial dependence appearing when the individual data is aggregated at the regional level. In case of existing possible remaining residual spatial autocorrelation, spatial hierarchical models with interregional effects allow capturing it. Our preliminary results show that individual well-being is affected by regional averages of social capital. Additionally, the random slope specification confirms the hypothesis of a different regional impact of the individual social capital depending on location. This evidence might indicate that the social and cultural environment where people lives make individuals to attach different relevance to the role of social and institutional trust, social norms and networks as determinants of individual wellbeing.
    Keywords: Life satisfaction; social capital; multilevel models; random slopes
    JEL: C50 I31 Z13
    Date: 2015–10
  7. By: Tia Palermo; UNICEF Office of Research - Innocenti
    Abstract: During the past decade, over a dozen government-run cash transfer programmes have been launched in sub-Saharan Africa, and there is growing evidence of their ability to improve a range of development outcomes. Comparing longitudinal data in four focus countries, this paper looks at a variety of emotional and physical aspects of young people’s development during their transition to adulthood.
    Date: 2015
  8. By: Leah Achdut (Ruppin Academic Center); Liema Davidovich (Ruppin Academic Center); Rita Troitski (Shamoon College of Engineering)
    Abstract: The study examines the dynamics of economic well-being and poverty among Israelis at older ages and their households, using both objective and subjective measures of well-being. It also provides an explanatory analysis of the factors associated with poverty status transitions over time. The study takes advantage of a unique and multidisciplinary longitudinal survey on people aged 50 and older in Israel, conducted as part of the SHARE project (Survey of Health, Aging and Retirement in Europe). A multinomial logistic regression - the model most frequently used for multinomial outcomes - is used to examine the impact of sociodemographic characteristics, health state and economic resources on poverty transitions between 2005 and 2010. The dependent variable consists of four outcomes: remaining persistently poor, managed to escape from poverty, fell into poverty, and remaining persistently non-poor. Poverty line is defined as 50% of the household's median (equivalent) disposable income.The findings indicate that poverty rate among old households remained high, albeit stable over time (25%). However, high mobility among poverty states was observed: 41% of the poor households in 2005 managed to escape from poverty in 2010, whilst 17% of the non-poor households in 2005 fell into poverty in 2010. The results of the multinomial logistic model emphasize the role of human capital factors on the likelihood of being in persistent poverty or on falling into poverty. Having less education and poorer health are associated with higher probability of remaining persistently poor or of falling into poverty over time. Employment status is a strong predictor as well: people who were out of the labor force are more likely to remain poor at both periods. The probability of a household being in chronic poverty decreases with the age, but the effect of gender was found to be insignificant. Finally, the likelihood of remaining persistently poor is higher for minorities.Examining the dynamics of well-being and poverty among older households has the potential to make an important contribution to our understanding of the impact of population ageing, and to shape of appropriate policy responses. The findings emphasize the importance of the income maintenance programs in ensuring the older households adequate benefits as well as of the importance of encouraging the participation of adults in the labor market.
    Keywords: Well-being,Poverty transitions, Old-age, SHARE
  9. By: Mikko Weckroth; Teemu Kemppainen; Jens F.L. Sørensen
    Abstract: Most of the aggregate level analyses on the relationship between objective and subjective measures for well-being have limited themselves to measures of national GDP and mean life satisfaction. We develop this line of research by embedding the analysis into the context of 289 NUTS regions in Europe and replacing the simple life satisfaction measure with measures of active human functioning. This approach suggest that the measures of personal and social well-being, as they are operationalized in the 6th round European Social Survey (ESS) questionnaire, can be treated as subjective indicators for social and human capital and thereby be are associated with the regional level GDP in cross-sectional analysis. The focus of this study could hence be defined as an interdisciplinary attempt to understand economic reality from the perspective of subjective well-being research. Thus, the paper also argues for better interdisciplinary communication between the traditions of economic geography and subjective well-being research. First, the results give further validation to the previous research indicating that general ´social trust` is strongly associated with economic performance. This component was shown to have robust and independent association with the dependent variable in both OLS and spatial filtering models. Also the indicator for ´social contact and support` appears to have positive and significant correlation with the regional GDP. On the subjective human capital the strongest predictor for regional GDP is a sense of ´competence and meaning` among the population. However, from the perspective of personal wellbeing, there seems to be some sort of tradeoff regarding some elements of objective and subjective wellbeing; the component ?autonomy and control` seems to be negatively correlated to economic performance. All of the effects described above proved robust also after including the objective control variables (population density, intramural R&D expenditure, share of tertiary educated population and employment). The results of this study are hoped to contribute to literature on regional economic development. This study offers some new insight to the instrumentalization and measuring of social and human capital. The subjective indicators used in this study are reflecting the quality of both human and social capital without retaining only to the objective quantity such as educational (human capital) or associational (social capital) attainment. From the policy perspective the results give tentative support to bottom-up policies facilitating local capacity building through supporting the psychological and social wellbeing and positive human functioning in regions. However, the cross-sectional framework limits significantly the possibility for any policy suggestions as we cannot confirm the assumptions on causalities embedded in the analysis. The results of this study could however inspire new interdisciplinary enquiries on this field of research and offer new alternative measures for building regional growth models.
    Keywords: human capital; social capital; subjective well-being; GDP; NUTS regions; informa
    JEL: R12 O11 I30
    Date: 2015–10
  10. By: Marta Lachowska (W.E. Upjohn Institute for Employment Research)
    Abstract: This paper uses tax rebate payments from the 2008 economic stimulus to estimate the effect of a one-time change in income on three measures of subjective well-being: life satisfaction, health satisfaction, and affect. The income effect is identified by exploiting the plausibly exogenous variation in the payment schedule of the rebates. Using both ordinary least squares and two-stage least squares estimators, I find that the rebates had a large and positive impact on affect, which is explained by a reduction in feelings of stress and worry. For life satisfaction and health satisfaction, there is weaker evidence of a positive impact. Overall, the results show that a temporary increase in liquidity may enhance emotional well-being and that this effect is relatively stronger for low-income respondents.
    Keywords: Subjective well-being, affect, income effect, quasi-experimental, instrumental variable
    JEL: I31 H31 E62
    Date: 2015–10
  11. By: Marta Barazzetta (Université du Luxembourg)
    Abstract: We empirically explore the relationship between expectations and subjective well-being. Theoretical models predict that expectations can influence experienced utility in two ways: (i) directly as anticipatory emotions in the form of savouring or dread; (ii) indirectly as internal reference levels in the form of deviations between expectations and actual achievements. We use twelve waves of the British Household Panel Survey to empirically investigate the double effect of expectations on experienced utility, as proxied by subjective well-being. We find a strong asymmetry in the way expectations affect subjective well-being. Negative deviations from expectations have a strong negative effect on subjective well-being, while the effect of positive deviations is weaker and sometimes insignificant. Expecting a worsening has a larger impact on subjective well-being than expecting an improvement.
    Keywords: Subjective well-being, expectations, disappointment aversion, panel data, BHPS.
    JEL: C23 D84 I31
    Date: 2015–09
  12. By: Okulicz-Kozaryn Adam
    Abstract: Most scholars in urban studies, public policy and public administration support city living, that is, they (usually implicitly) suggest that people are happy in cities or at least they focus on how to make people happy in cities. Planners also largely focus on making cities happy places, e.g., so called Smart Growth. In short, low density living is not a popular idea among scholars, although it used to be several decades ago. This study uses General Social Survey to calculate subjective well-being (happiness) by size (population) of a place to find out when a place is too big. The answer is somewhere between 200 and 700 thousand of people. When population exceeds several hundred thousand, the unhappiness settles in. Results are robust to the operationalization of an urban area, and to the elaboration of the model with multiple controls known to predict life satisfaction. This study concerns only the US, and results should not be generalized to other countries. Directions for future research are discussed.
    Date: 2015–10

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