nep-hap New Economics Papers
on Economics of Happiness
Issue of 2017‒05‒14
two papers chosen by
Viviana Di Giovinazzo
Università degli Studi di Milano-Bicocca

  1. Netherlands beyond GDP: A Wellbeing Index By Rijpma, Auke; Moatsos, Michail; Badir, Martijn; Stegeman, Hans
  2. The City as a Self-Help Book: The Psychology of Urban Promises By Cardoso, Rodrigo V.; Meijers, Evert J.; van Ham, Maarten; Burger, Martijn J.; de Vos, Duco

  1. By: Rijpma, Auke; Moatsos, Michail; Badir, Martijn; Stegeman, Hans
    Abstract: Since the modern conceptualization of GDP (Kuznets, 1934), serious concerns have been raised to point out that it cannot properly represent wellbeing of a society. Despite the recent reaffirmations of these concerns (Stiglitz et al., 2009; OECD, 2011), GDP is still the dominant indicator. While dashboard approaches have their merits, we pursue to advance a composite wellbeing index as an alternative to GDP in measuring the progress of society. This approach here is documented for the Netherlands, though it can be applied to any advanced economy. Care has been taken to address methodological problems that arise from the index compilation exercise by using appropriate international goalposts from the Netherlands’ peer countries. To avoid making subjective choices in choosing the relative weights of various indicators we utilize the weights reported by the users of the OECD’s Better Life initiative from the Netherlands. With respect to the results of the indicator, it turns out that the recent financial crisis took a couple of years more to gradually hit the Netherlands from the various wellbeing angles, compared to GDP per capita. At the same time, in terms of our wellbeing measure, the Netherlands lost over a decade, as in 2015 the wellbeing index remains lower than in 2006.
    Keywords: wellbeing index, gdp alternative, composite indicator, Netherlands
    JEL: C43 I31
    Date: 2017–05–04
  2. By: Cardoso, Rodrigo V. (Delft University of Technology); Meijers, Evert J. (Delft University of Technology); van Ham, Maarten (Delft University of Technology); Burger, Martijn J. (Erasmus University Rotterdam); de Vos, Duco (Delft University of Technology)
    Abstract: Despite the many negative aspects of life in cities, urban promises of economic prosperity, freedom and happiness have fuelled the imagination of generations of migrants, who have flocked to cities in search of a better life, invariably exaggerating the opportunities and neglected the potential disadvantages of their choice. This paper uses insights from psychological literature to better understand why people have such strong, positive and apparently overrated expectations about cities. We dwell into concepts of bounded rationality to describe the cognitive biases and heuristics affecting decision-making under uncertainty and apply them to the way individuals perceive and act upon the promises of urban life. By linking this literature to urban theory, we can better understand how individuals make their decisions about moving to and living in cities. We thereby offer an understanding of urbanisation and migration processes departing from economic rationality assumptions and explain the remarkable attractive force of cities throughout human history. Finally, we discuss the ways in which human biases in favour of city narratives and bright urban futures can be exploited by 'triumphalist' accounts of cities in policy and media, which neglect the embedded injustices and structural problems of urban life.
    Keywords: cognitive biases and heuristics, decision-making, urban migration, social mobility, subjective well-being, urban triumphalism
    JEL: O18 R23
    Date: 2017–04

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