nep-hap New Economics Papers
on Economics of Happiness
Issue of 2017‒11‒12
six papers chosen by
Viviana Di Giovinazzo
Università degli Studi di Milano-Bicocca

  1. Big Data Measures of Well-Being: Evidence from a Google Well-Being Index in the United States By Algan, Yann; Beasley, Elizabeth; Guyot, Florian; Higa, Kazuhito; Murtin, Fabrice; Senik, Claudia
  2. Overoptimistic Entrepreneurs: Predicting Wellbeing Consequences of Self-Employment By Odermatt, Reto; Powdthavee, Nattavudh; Stutzer, Alois
  3. Financial Inclusion and Welfare in Post-Apartheid South Africa By Elizabeth Lwanga Nanziri
  4. The Relationship between Status and Happiness: Evidence from the Caste System in Rural India By van Landeghem, Bert; Vandeplas, Anneleen
  5. Reactivity in Economic Science By Bruno S. Frey
  6. Happiness at work By Jan-Emmanuel De Neve; George Ward

  1. By: Algan, Yann; Beasley, Elizabeth; Guyot, Florian; Higa, Kazuhito; Murtin, Fabrice; Senik, Claudia
    Abstract: We build an indicator of individual well-being in the United States based on Google Trends. The indicator is a combination of keyword groups that are endogenously identified to fit with weekly time-series of subjective wellbeing measures collected by Gallup Analytics. We find that keywords associated with job search, financial security, family life and leisure are the strongest predictors of the variations in subjective wellbeing. The model successfully predicts the out-of-sample evolution of most subjective wellbeing measures at a one-year horizon.
    Keywords: Subjective Well-Being; Big Data; Bayesian Statistics
    Date: 2016–06
  2. By: Odermatt, Reto (University of Basel); Powdthavee, Nattavudh (University of Warwick); Stutzer, Alois (University of Basel)
    Abstract: The formation of expectations is a fundamental part of the process when people decide about engaging in an entrepreneurial venture. We evaluate the accuracy of newly self-employed people's predictions of their overall future wellbeing. Based on individual panel data for Germany, we find that they are overly optimistic when we compare their predicted life satisfaction with their actual life satisfaction five years later on. This overoptimism also holds for those entrepreneurs who successfully remain in business for at least five years. A possible reason might be that they underestimate the heavy workload reflected in higher working hours than desired and the drop in leisure satisfaction.
    Keywords: adaptation, overoptimism, life satisfaction, projection bias, wellbeing, self-employed
    JEL: D83 D91 J20 I31
    Date: 2017–10
  3. By: Elizabeth Lwanga Nanziri
    Abstract: The socioeconomic transformation process in post-apartheid South Africa has generated research on a wide range of economic issues, in particular, inequality and poverty. Surprisingly, there is limited empirical analysis on financial inclusion. This paper fills this void in the literature by answering two questions: (i) Does financial inclusion improve welfare? (ii) Is the benefit from using formal financial services greater than from using non-formal financial services? The paper uses a unique cross-sectional dataset on use of financial products over the period 2006–2011. Two measures of welfare are constructed – a well-being index and a wealth index. The sample is divided into users of formal financial services and users of non-formal financial services. The focus is on the differences in the welfare of the two groups. This difference in welfare is then decomposed through the Recentered Influence Function (RIF) approach. Finally, an OLS regression of the recentered welfare is estimated across quantiles for each group. Results show that: (i) overall, using formal financial products is associated with higher welfare; (ii) regardless of the measure of welfare used, the results are qualitatively similar: the wealth index picks up differences in the top quantiles, while the well-being index picks the differences in the lower quantiles; (iii) welfare disparities are accounted for by the unexplained factors related to income and education; and (iv) there are welfare gains from using non-formal credit and insurance products for individuals in the lower quantiles. The results suggest that the pursuit of financial inclusion should be complemented with policies that improve education and incomes, especially for the marginalised. Key words:Financial Inclusion; Recentered Influence Function; South Africa
    Date: 2017–04
  4. By: van Landeghem, Bert (University of Sheffield); Vandeplas, Anneleen (European Commission, Directorate Employment, Social Affairs and Inclusion)
    Abstract: A large number of empirical studies have investigated the link between social status and happiness, yet in observational data identification challenges remain severe. This study exploits the fact that in India people are assigned a caste from birth. Two identical surveys of household heads (each with N=1000) in rural Punjab and Andhra Pradesh show an increasing pattern in economic welfare across the hierarchy of castes. This illustrates that at least in rural regions, one's caste is still an important determinant for opportunities in life. Subsequently, we find that the castes at the top are clearly more satisfied than the lower and middle castes. This result, which is in line with predictions of all major social comparison theories, is robust across the two case studies. The pattern across low and middle castes, however, is less clear, reflecting the complex theoretical relationship between being of middle rank on the one hand, and behaviour, aspirations and well-being on the other hand. In the Punjab sample, we even find a significant U-shape, the middle castes being the least happy. Interestingly, these patterns resemble those found for Olympic Medalists (first documented by Medvec et al. 1995).
    Keywords: subjective well-being, happiness, social status, social comparison
    JEL: I31 C1 O12
    Date: 2017–10
  5. By: Bruno S. Frey
    Abstract: There is a fundamental difference between the natural and the social sciences due to reactivity. This difference remains even in the age of Artificially Intelligent Learning Machines and Big Data. Many academic economists take it as a matter of course that economics should become a natural science. Such a characterization misses an essential aspect of a social science, namely reactivity, i.e. human beings systematically respond to economic data, and in particular to interventions by economic policy, in a foreseeable way. To illustrate this finding, I use three examples from quite different fields: Happiness policy, World Heritage policy, and Science policy.
    Keywords: economics, social, and natural science, reactivity, data, happiness, economic policy
    JEL: A10 B40 C70 C80 D80 Z10
    Date: 2017
  6. By: Jan-Emmanuel De Neve; George Ward
    Abstract: Work-life balance is a particularly strong predictor of people's happiness. High degrees of job satisfaction can hide low levels of engagement at work. Happiness helps to shape job market outcomes, productivity and firm performance. And people in blue-collar jobs report lower happiness everywhere in the world. These are among the findings of research on the roles played by work, employment and joblessness in shaping our happiness.
    Keywords: subjective wellbeing, employment, job type, job characteristics
    Date: 2017–10

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