nep-hap New Economics Papers
on Economics of Happiness
Issue of 2017‒03‒19
three papers chosen by

  1. Absolute vs Relative Income and Life Satisfaction By Rickardsson, Jonna; Mellander, Charlotta
  2. Do Equal Rights for a Minority Affect General Life Satisfaction? By Berggren, Niclas; Bjørnskov, Christian; Nilsson, Therese
  3. Weather and income: effect on household saving and well-being in South Africa. By Helena Ting; Martina Bozzola; Timothy Swanson

  1. By: Rickardsson, Jonna (Jönköping International Business School (JIBS)); Mellander, Charlotta (Jönköping International Business School (JIBS) & Centre of Excellence for Science and Innovation Studies (CESIS))
    Abstract: This paper examines whether subjective life-satisfaction is most strongly related to absolute or relative income in terms of either proximal neighbors or a wider aggregated region. The analysis utilizes two unique datasets - survey data on happiness in combination with fine-level income data for postal codes and municipalities. We find a significant relationship between happiness and both personal income and relative income position among nearby neighbors and more remote neighbors. Hence, being rich as well as being richer than others in the area increases the likelihood of being more satisfied with life. Above all, we find individuals’ level of life-satisfaction to be more strongly related to the income of people in the larger municipality than to the income of nearby neighbors.
    Keywords: Life-satisfaction; Happiness; Subjective well-being; Absolute income; Relative income
    JEL: I31 O15 P46 R10
    Date: 2017–03–17
  2. By: Berggren, Niclas (Research Institute of Industrial Economics (IFN)); Bjørnskov, Christian (Aarhus University); Nilsson, Therese (Research Institute of Industrial Economics (IFN))
    Abstract: While previous research examines how institutions matter for general life satisfaction and how specific institutions embodying equal rights for gay people matter for the life satisfaction of gays, we combine these two issues to analyze how the latter type of institutions relates to general life satisfaction. The question is how people in general are affected by laws treating everyone equally irrespective of sexual orientation. We find that legal recognition of partnership, marriage and adoption rights, as well as an equal age of consent, relate positively to general life satisfaction. Consequently, same-sex marriage and similar reforms come at no “welfare” cost to society at large – if anything, the opposite appears to hold. We further build on previous research showing positive effects of economic freedom on happiness and on tolerance towards gay people and interact our rights measure with economic freedom. This reveals that the positive effect on general happiness of equal rights mainly appears in countries with low economic freedom. This likely follows because minority rights are perceived to indicate openness to much-desired reforms in other areas.
    Keywords: Life satisfaction; Same-sex marriage; Rights; Institutions; Culture; Immigration; Tolerance; Gays and lesbians; Minorities; Integration
    JEL: I31 Z13 Z18
    Date: 2017–03–08
  3. By: Helena Ting; Martina Bozzola; Timothy Swanson
    Abstract: In countries where rain-fed agriculture constitutes a significant portion of household livelihood, increased weather variability represents a source of vulnerability to stable consumption, food security and household well-being. Weather induced income changes affect household consumption and saving decisions. We evaluate saving and consumption responses to weather variation in South Africa, leveraging a newly available panel of nationally representative households covering the period from 2008 to 2014 and long term climate data. We test our data against predictions of the standard rational consumption model and some of its main extensions (i.e., precautionary saving and myopic consumption), and compare differences among households engaged in agriculture activities versus those that do not. Furthermore, we evaluate the impact of saving on household life satisfaction and health behavior. In accordance with previous literature, we find that households save in response to both transitory and permanent income change, although the proportion saved from transitory income is significantly higher. We find signs of precautionary saving driven by non-agriculture households, while we find stronger evidences of myopic consumption for agriculture households. In addition, we show that a one-unit increase in log-saving from transitory income increases the odds of a unit increase in self-reported life satisfaction of the household head by 14%, and a one unit increase in log-saving from permanent income leads to a 6% increase in hazard ratio of having taken an HIV test. This latter result may indicate that preventative health behavior such as HIV testing requires a stronger inducement than a transitory injection of income. Further research is needed to identify the mechanisms by which saving affect life satisfaction and health seeking behavior in developing countries.
    Keywords: consumption and saving; health behavior; agriculture; climate; Africa; South Africa.
    JEL: D14 I14 Q12 Q56
    Date: 2017–02–02

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.