nep-hap New Economics Papers
on Economics of Happiness
Issue of 2016‒01‒29
two papers chosen by
Viviana Di Giovinazzo
Università degli Studi di Milano-Bicocca

  1. Does self-employment really raise job satisfaction? Adaptation and anticipation effects on self-employment and general job changes By Dominik Hanglberger; Joachim Merz
  2. Valuing the benefits from health care interventions using life satisfaction data By Howley, P,;

  1. By: Dominik Hanglberger (Leuphana University L\"{u}neburg, Department of Economics, Research Institute on Professions); Joachim Merz (Leuphana University L\"{u}neburg, Department of Economics, Research Institute on Professions)
    Abstract: Empirical analyses using cross-sectional and panel data found significantly higher levels of job satisfaction for the self-employed than for employees. We argue that by neglecting anticipation and adaptation effects estimates in previous studies might be misleading. To test this, we specify models accounting for anticipation and adaptation to self-employment and general job changes. In contrast to recent literature we find no specific long-term effect of self-employment on job satisfaction. Accounting for anticipation and adaptation to job changes in general, which includes changes between employee jobs, reduces the effect of self-employment on job satisfaction by two-thirds. When controlling for anticipation and adaptation to job changes, we find a positive anticipation effect of self-employment and a positive effect of self-employment on job satisfaction in the first years of self-employment. After three years, adaptation eliminates the higher satisfaction of being self-employed. According to our results, previous studies overestimate the positive long-term effects of self-employment on job satisfaction.
    Keywords: job satisfaction, self-employment, hedonic treadmill model, adaptation, anticipation, fixed effects panel estimation, German Socio-Economic Panel (SOEP).
    JEL: J23 J28 J81
    Date: 2015–12
  2. By: Howley, P,;
    Abstract: This paper uses life satisfaction data to calculate the extent to which individuals are willing to trade money for improvements in their health status. Using a large nationally representative survey in the UK, I showthat the amount of extra equivalent household income to make someone with a health condition, as well off in terms of life satisfaction as someone without the health condition, ranges from a low of £4,235 per annum for impairments associated with asthma to a high of £31,283 for impairments associated with congestive heart failure. These values could be used as a basis for a cost-benefit analysis of health care interventions aimed at the medical conditions examined. Relative to previous work, I address a number of critical empirical challenges when it comes to using this compensating income variation approach for determining the monetary value of a health improvement. First, I address the issue of income endogeneity in life satisaction by instrumenting income with the educational status of respondents’ parents. Second, I control for the potentially confounding role of personality differences by including a measure of the Big Five personality traits in the micro-econometirc analysis of life satisfaction.
    Keywords: life satisfaction; compensating income variation; instrumental variables; health conditions;
    JEL: I1 I31
    Date: 2016–01

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