nep-hap New Economics Papers
on Economics of Happiness
Issue of 2016‒02‒29
ten papers chosen by
Viviana Di Giovinazzo
Università degli Studi di Milano-Bicocca

  1. Do Losses Bite More than Gains? Evidence from a Panel Quantile Regression Analysis of Subjective Well-being in Japan By Fang, Zheng; Niimi, Yoko
  2. Do people seek to maximize their subjective well-being? By Marc Fleurbaey; Hannes Schwandt
  3. Subjective Truths By Baillon, A.
  4. Europe 2020 Strategy Under the Scope of Life Satisfaction By Ángeles Sánchez-Domínguez; Maria J. Ruiz Martos
  5. Religion as an Unemployment Insurance and the Basis of Support for Public Safety Nets: The Case of Latin America and the Caribbean By Camilo Pecha; Inder J. Ruprah
  6. Does Worker Wellbeing Affect Workplace Performance? By Alex Bryson; John Forth; Lucy Stokes
  7. Urbanization, Natural Amenities, and Subjective Well-Being: Evidence from U.S. Counties By John V. Winters; Yu Li
  8. Macroeconomic Fluctuations in Home Countries and Immigrants’ Wellbeing: New Evidence from Down Under By Ha Trong Nguyen; Alan Duncan
  9. Keeping up with the e-Joneses: Do online social networks raise social comparisons? By Sabatini, Fabio; Sarracino, Francesco
  10. Welfare measures to assess urban quality of life By Francesco Andreoli; Alessandra Michelangeli

  1. By: Fang, Zheng; Niimi, Yoko
    Abstract: This paper conducts an empirical analysis of the distributional effects of the determinants of happiness by applying quantile regression techniques to panel data from the "Preference Parameters Study" of Osaka University, a nationally representative survey conducted in Japan. The key question examined in the paper is whether we observe an asymmetry between the effects of positive and negative changes on individual happiness, and if it exists, whether it is observed uniformly across the happiness distribution. Such an asymmetry is referred to as loss aversion in prospect theory. Loss aversion effects are analyzed with respect to relative income as well as expected future income changes. We find that feeling relatively poor has a greater negative effect on happiness than the positive effect of feeling relatively rich, i.e., losses bite more than gains. However, no evidence for loss aversion is detected with respect to expected future income changes as individual happiness is found to be more sensitive to gains than to losses, though the happiness of the least happy group is found to be affected more by losses than by equivalent gains.
    Keywords: Happiness, Japan, loss aversion, panel quantile regression, subjective well-being
    JEL: I31 C31
    Date: 2015–12
  2. By: Marc Fleurbaey; Hannes Schwandt
    Abstract: In a new survey we ask respondents, after a standard Subjective Well-Being (SWB) question, if they can think of changes in their lives that would improve their SWB score. If the SWB score is just one argument among others in the respondents’ goals in life, they should easily find ways to improve it, at the expense of other dimensions they care about. Our results suggest that close to 90% of the respondents actually seek to maximize their SWB. The life satisfaction question appears the best contender as the “maximand” in the contest, before the ladder-of-life question and felt happiness. Among the other goals that people pursue and for which they are willing to sacrifice some of their SWB, the prominent appear to be about their relatives and about their future self.
    Keywords: subjective well-being; life satisfaction; happiness; life goals; utility
    JEL: D0 D60
    Date: 2015–11
  3. By: Baillon, A.
    Abstract: __Abstract__ On the one hand, economists heavily rely on hard numbers: GDP, growth rate, and exchange rates. On the other hand, their explanations often rely on soft factors: executive confidence in the economy, consumer sentiment, and investor expectations. The hard numbers are objective, but the soft factors are subjective and depend on each individual. Economists increasingly recognize the need to study subjective factors. The first part of the lecture illustrates the key role of subjective truths in modern economics. For instance, measures of subjective well-being are now being proposed to replace or at least complement GDP. Economic policies often rely on subjective forecasting by experts. The second part of the lecture will show that even though they are subjective, the soft factors can still be studied objectively. We will see how to incentivize people to reveal their expectations about future events but also their confidence in their expectations. Finally, I will show how to make people reveal truths that are completely unverifiable.
    Keywords: expectations, subjective well-being, confidence, ambiguity, uncertainty, measurement, prediction markets
    JEL: C44 C88 D03 D7 D81 D84 J17 M31
    Date: 2015–05–22
  4. By: Ángeles Sánchez-Domínguez (Departament of Applied Economics, University of Granada, Spain.); Maria J. Ruiz Martos (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: Europe 2020 Strategy aims to convert the European Union into a smart, sustainable and inclusive economy by setting eight targets that the Members should met by 2020. This paper measures how far European Member States are to Europe 2020 Strategy targets, discusses the treatment of inequalities in the Strategy and the extent to which Europe 2020 Strategy captures citizens’ subjective wellbeing. We first construct an index that synthesizes the eight targets of the Europe 2020 Strategy into a one-dimensional target –EU 2020 synthetic target- and the situation of each EU28 Member State in 2012 with respect to them –2012 synthetic situation-. Hence we can measure the distance of each EU Member State synthetic situation in 2012 from the EU 2020 synthetic target. We find that none of the Member States meets the EU 2020 synthetic target; Denmark is the closest to and Malta is the furthest from it; and identify clusters of Member States in terms of the distances from the EU 2020 synthetic target, the North EU region is closer to and the Mediterranean region is further away from it. We then discuss that setting aside inequalities –just overall poverty is targeted- makes the Europe 2020 Strategy unable to accomplish its own priority of “smart, sustainable and inclusive growth”: it does not only prevent inclusive but also smart and sustainable growth. In fact, when we extent the distance analysis above by adding five inequality targets -income distribution, gender (male and female) employment gap, long-term unemployment, young employment and child poverty- to the Europe 2020 Strategy, we find that all Member States, except for Austria, Cyprus, Germany, Malta and Netherlands, increase their distance to the inequality-extended EU 2020 synthetic situation. Finally, we analyse each Member State’s relationship between its objective positions regarding, on the one hand, the EU 2020 synthetic target versus the inequality-extended EU2020 synthetic target and, on the other hand, its life satisfaction level, inhabitants’ subjective position. We find that the life satisfaction index is more correlated with the inequality-extended EU 2020 index than with the EU 2020 index.
    Keywords: Inequality, Composite Index, Crisis, Life Satisfaction, 2020 Europe
    JEL: C43 O47 I31 R11 R58
    Date: 2016–01–02
  5. By: Camilo Pecha; Inder J. Ruprah
    Abstract: This paper explores the role of religion in mitigating the degree to which unemployment reduces subjective well-being and it examines its support of social programs. The paper goes beyond existing literature in three ways: It extends existing literature to Latin America and Caribbean countries; it explicitly includes analysis of two confounders (social capital and personal traits) ignored in existing literature; and it moves beyond correlation by using the propensity score method to tease out a causal relation between religion and well-being. We find that religion acts as a buffer: Unemployed religious people are relatively happier than are nonreligious unemployed people. However, in contrast with the existing literature, we find that religious people are relatively more supportive of public social policy.
    Keywords: Social Policy & Protection, Workforce & Employment, life satisfaction, religion, unemployment, insurance
    Date: 2015–06
  6. By: Alex Bryson; John Forth; Lucy Stokes
    Abstract: This paper uses linked employer-employee data to investigate the relationship between employees’ subjective well-being and workplace performance in Britain. The analyses show a clear, positive and statistically-significant relationship between the average level of job satisfaction at the workplace and workplace performance. This finding is present in both cross-sectional and panel analyses and is robust to various estimation methods and model specifications. In contrast, we find no association between levels of job-related affect and workplace performance.
    Date: 2015–05
  7. By: John V. Winters (Oklahoma State University); Yu Li (Oklahoma State University)
    Abstract: This paper examines the effects of county-level urbanization and natural amenities on subjective well-being (SWB) in the U.S. SWB is measured using individual-level data from the Behavioral Risk Factor Surveillance System (BRFSS) which asks respondents to rate their overall life satisfaction. Using individual-level SWB data allows us to control for several important individual characteristics. The results suggest that urbanization lowers SWB, with relatively large negative effects for residents in dense counties and large metropolitan areas. Natural amenities also affect SWB, with warmer winters having a significant positive effect on selfreported life-satisfaction. Implications for researchers and policymakers are discussed.
    Keywords: subjective well-being; urbanization; population density; amenities; quality of life
    JEL: I00 Q00 R00
    Date: 2015–09
  8. By: Ha Trong Nguyen (Bankwest Curtin Economics Centre, Curtin University); Alan Duncan (Bankwest Curtin Economics Centre, Curtin University)
    Abstract: In this paper we provide the first solid empirical evidence that improvements in home countries’ macroeconomic conditions, as measured by a higher GDP per capita and lower price levels, increase immigrants’ subjective well-being. We demonstrate this using 12 years of data from the Household Income and Labour Dynamics in Australia panel, as well as macroeconomic indicators for 59 countries of origin, and exploiting exogenous changes in macroeconomic conditions across home countries over time. Controlling for immigrants’ observable and unobservable characteristics we also find the positive GDP impact is statistically significant and economically large in size. Furthermore, the GDP and price impact erodes when immigrants get older, or when they stay in the host country beyond a certain period of time. However, home countries’ unemployment rates and exchange rate fluctuations have no impact on immigrants’ well-being.
    Keywords: GDP, Unemployment, Inflation, Exchange Rate, Well-being, Immigrants, Australia
    JEL: I31 J15
    Date: 2015–03
  9. 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, which are a source of frustration. We test the hypothesis that the use of social networking sites (SNS) increases social comparisons as proxied by people’s dissatisfaction with their income. After controlling for the possibility of reverse causality, our results suggest that SNS users have a higher probability to compare their achievements with those of others. We conclude that SNS can be a strong engine of frustration for their users.
    Keywords: social networks; social networking sites; social comparisons; satisfaction with income; relative deprivation.
    JEL: D83 I31 O33 Z1 Z13
    Date: 2016–02–03
  10. By: Francesco Andreoli (Department of Economics (University of Verona)); Alessandra Michelangeli (University of Milano-Bicocca, DEMS, Piazza Ateneo Nuovo 1, Milan I-20126, Italy)
    Abstract: The standard index of urban quality of life provides an approximated value of the quality of life, since it associates the bundles of amenities observed in urban areas with their implicit marginal prices, and not with the prices of infra-marginal units. In this paper, we adjust the standard measure to determine the monetary value of any bundle, which might substantially differ from the bundle of the marginal quantities of amenities. Our methodology relies on a welfare measure that represents the individual willingness to give up (accept) to insure (forego) a change in the current distribution of amenities across areas will take place, keeping the level of utility unchanged. We obtain a new measure, the value-adjusted quality of life index, that can be identified from parametric models of consumer preferences. We use this index to measure the quality of life in the city of Milan.
    Keywords: Hedonic Models, Quality of Life, Structural models
    JEL: D6 H4 R1 R2
    Date: 2014–06

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