nep-hap New Economics Papers
on Economics of Happiness
Issue of 2017‒01‒29
two papers chosen by

  1. The Paradox of the Joneses: Superstar Houses and Mortgage Frenzy in Suburban America By Clement Bellet
  2. The Cultural Foundations of Happiness By Pierluigi Conzo; Arnstein Aassve; Giulia Fuochi; Letizia Mencarini

  1. By: Clement Bellet
    Abstract: Despite a major upscaling of suburban houses over the last decades, house satisfaction has remained steady in the United States. I show that upward comparison in size can explain this paradox, as top housing size mirrored the U-shaped pattern of top income inequality. Combining data from the American Housing Survey from 1984 to 2009 with an original dataset of three millions suburban houses built between 1920 and 2009, I find that suburban owners who experienced a relative downscaling of their home due to the building of bigger units in their suburb record lower satisfaction and house values. These homeowners are more likely to upscale and subscribe to new loans. Results are robust to household fixed effects and concentrated in counties with lower segregation, suggesting a causal link between inequality and mortgage debt. In the absence of keeping up with the Joneses, I estimate the mortgage debt to income ratio would have been 25 percentage points lower at the eve of the 2008 financial crisis.
    Keywords: inequality, social preferences, subjective well-being, housing, household debt
    JEL: D01 D03 I30 R20
    Date: 2017–01
  2. By: Pierluigi Conzo (Università di Torino, CSEF and Collegio Carlo Alberto); Arnstein Aassve (Università Bocconi, Dondena Centre for Research on Social Dynamics and Public Policy); Giulia Fuochi (Università di Padova); Letizia Mencarini (Università Bocconi, Dondena Centre for Research on Social Dynamics and Public Policy)
    Abstract: The paper provides a framework for how culture affects happiness. According to self-determination theory, well-being is driven by the satisfaction of three basic psychological needs: autonomy, relatedness and competence. We assess if, and to what extent, generalized trust and the values of obedience and respect influence Europeans’ satisfaction of these needs, controlling for income and education. We find a positive and significant impact for generalized morality (high trust and respect, low obedience), which is robust to different checks for endogeneity, including instrumental variable regressions at country, regional and individual level and panel-data estimations.
    Keywords: self-determination, culture, trust, subjective well-being, happiness, life satisfaction.
    JEL: A13 E02 P48 I31 Z13
    Date: 2017–01–13

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