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

  1. A Pure Hedonic Theory of Utility and Status: Unhappy but Efficient Invidious Comparisons By Courty, Pascal; Engineer, Merwan
  2. Religiosity and Life Satisfaction in Russia: Evidence from the Russian Data By Maksym Bryukhanov; Igor Fedotenkov
  3. The Impact of Terrorism on Well-being: Evidence from the Boston Marathon Bombing By Andrew E. Clark; Orla Doyle; Elena Stancanelli
  4. Subjective well-being and adaptation. The case of Uruguay By Gonzalo Salas; Andrea Vigorito
  5. So dissatisfied to leave? The role of perceptions, expectations and beliefs on youths’ intention to migrate By Luciana Méndez
  6. EWIGE - European Wealth data InteGration in EUROMOD By Sarah Kuypers; Francesco Figari; Gerlinde Verbist; Dorien Verckist
  7. The Human Development Index In Canada: Ranking the Provinces and Territories Internationally, 2000-2015: An Update By James Uguccioni, Andrew Sharpe and Richard Beard
  8. The Working Class Left Behind? The Class Gap in Life Satisfaction in Germany and Switzerland over the Last Decades By Oliver Lipps; Daniel Oesch
  9. Wealthier, Happier and More Self-Sufficient: When Anti-Poverty Programs Improve Economic and Subjective Wellbeing at a Reduced Cost to Taxpayers By Titus J. Galama; Robson Morgan; Juan E. Saavedra

  1. By: Courty, Pascal; Engineer, Merwan
    Abstract: We examine status preferences where agents compare their own utility relative to the utilities of others, in addition to valuing own consumption. The utility functions are, therefore, implicit functions of each other. As long as status utility comparisons are not too intense, they do not affect either the competitive equilibrium or the set of efficient allocations. However, status utility comparison may substantially reduce average utility and dramatically increase utility inequality. Equating utility with happiness operationalizes the theory and provides an explanation to the puzzle of why invidious comparisons can generate so much unhappiness without much inefficiency. Our theory has very different welfare and political economy implications from other status theories, even when reduced form representations appear observationally equivalent.
    Keywords: Conspicuous consumption; Happiness; inequality; rat race; reference group; Status; utility; welfare
    JEL: D10
    Date: 2017–12
  2. By: Maksym Bryukhanov (National Research University Higher School of Economics); Igor Fedotenkov (National Research University Higher School of Economics)
    Abstract: Does religiosity make you happy? Many studies document positive associations between religiosity and various forms of subjective wellbeing. This is also true for general life satisfaction in normal economic conditions and in the case of economic shocks. However, both life satisfaction and religiosity may be correlated with unobserved individual and household traits or unobserved life shocks which can relate to reverse causality. These facts result in endogeneity and make ordinary least square estimates biased. In our study, we employ two methods to avoid possible endogeneity issues – we use fixed effects and instrumental variable estimations. Using Russian Longitudinal Monitoring Survey (RLMS-HSE) data and different econometric models, we document positive associations between religiosity and life satisfaction. In particular, fixed effect and instrumental variable regressions provide evidence for a positive effect of religiosity.
    Keywords: Life satisfaction, religiosity, RLMS-HSE, endogeneity
    JEL: D10 Z12
    Date: 2017
  3. By: Andrew E. Clark; Orla Doyle; Elena Stancanelli
    Abstract: A growing literature concludes that terrorism impacts the economy, yet less is known about its impact on utility. This paper estimates the impact of the 2013 Boston Marathon Bombing on well-being, by exploiting representative U.S. daily data. Using both a regression discontinuity and an event study design, whereby the 2012 Boston marathon serves as a counterfactual, we find a sharp reduction in well-being, equivalent to a two percentage point rise in annual unemployment. The effect is stronger for women and those living in nearby States, but does not persist beyond one week, thus demonstrating the resilience of well-being to terrorism.
    Keywords: Well-being; Terrorism; Regression discontinuity design; Differences-in-differences
    JEL: I31 J21 J22 F52
    Date: 2017–09
  4. By: Gonzalo Salas (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Andrea Vigorito (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: We assess the recent evolution of the quality of life in Uruguay, analysing whether current subjective well-being levels are conditioned by the objective well-being trajectory of each individual. We explore subjective well-being in three domains: life, economic situation and housing satisfaction. Although adaptation has been addressed in the empirical literature for developed countries, there is scarce evidence for developing countries due to the lack of suitable panel datasets. In this article, we provide an econometric test of the adaptation hypothesis based on longitudinal data from Uruguay for the years 2004, 2006 and 2011/12 (Estudio Longitudinal de Bienestar en Uruguay). Our main findings show that present levels of life, economic and housing satisfaction are each positively correlated with the corresponding contemporary and lagged objective variable of interest. Thus, we reject the adaptation hypothesis in all the dimensions considered. We also explore the role of social interactions in the three subjective well-being dimensions. Average objective well-being of the reference group (either income or crowding) is not associated with individual subjective well-being levels. However, life satisfaction is positively correlated with the average subjective well-being of the reference group.
    Keywords: Adaptation, adaptive preferences, subjective well-being, Uruguay
    JEL: I31
    Date: 2017–11
  5. By: Luciana Méndez (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: This study analyzes the extent to which Uruguayan youths’ economic dissatisfaction drives intention to migrate by exploring those factors that can affect people's economic satisfaction. Causality is explored using instrumental variable analysis and conditional mixed process estimations. The findings of this study point to a causal negative relationship from economic satisfaction to youths’ desires to migrate. Also, results highlight the importance of subjective and objective income, individuals’ perceptions of the opportunities available in the country regarding social mobility, job access, housing, and adequate income, in shaping youths’ reported economic satisfaction and therefore their desire to migrate.
    Keywords: Subjective well-being, intention to migrate, Uruguay
    JEL: F22 I31 J10
    Date: 2017–11
  6. By: Sarah Kuypers (Universiteit Antwerpen); Francesco Figari (Università dell'Insubria); Gerlinde Verbist (Universiteit Antwerpen); Dorien Verckist (Universiteit Antwerpen)
    Abstract: The need for more comprehensive and integrated data on individual well-being is widely recognised. In order to identify better measures of economic performance in a complex economy and thus going Beyond GDP, Stiglitz, Sen and Fitoussi (2009) recommend to consider income, consumption and wealth and to give more prominence to their joint distribution. New household surveys as those developed as part of the Luxembourg Wealth Study and the Eurosystem Household Finance and Consumption Network (HFCS) represent a milestone in the ongoing process to better measure individual well-being. We explore the prospects for using the HFCS dataset as an underlying micro-database for the EU tax-benefit model, EUROMOD. The advantages of this process are twofold. On the one hand, as the HFCS only contains gross income amounts which are not suitable for redistributive analysis, we derive net incomes by simulating the gross-to-net transition with EUROMOD taking into account all important details of the social security and personal income system. On the other hand, we discuss the expansion of new policy domains introduced into the EUROMOD simulations such as wealth taxation, incentives for wealth accumulation and asset tests determining benefit eligibility.
    Keywords: Wealth taxation, EUROMOD, HFCS
    Date: 2017–11
  7. By: James Uguccioni, Andrew Sharpe and Richard Beard
    Abstract: Overall, our report highlights the diverse human development experiences of Canadians that are concealed by Canada’s overall HDI.
    Keywords: Human Development Index, International Index, Income, Life expectancy, Education, Well-Being, Canada,
    JEL: E24 I31 F00 I2 J17 O15
    Date: 2017–08
  8. By: Oliver Lipps; Daniel Oesch
    Abstract: The 1990s and 2000s were a gloomy period for Germany’s working class, hit by mass unemployment, welfare retrenchment and wage stagnation. We examine whether the growing economic disparity between the top and the bottom of Germany’s class structure was accompanied by a widening class gap in life satisfaction. We analyse whether there is a social class gradient in life satisfaction and whether, over the last decades, this class gradient increased in Germany, relative to the comparison case of Switzerland. We use panel data for Germany (1984-2014) and Switzerland (2000-2015) and check the robustness of our results by replicating our analysis with the pooled German and Swiss samples of the European Social Survey (2002-2014). In both countries, respondents in higher classes report substantially higher life satisfaction than those in lower classes. The class gap is twice as large in Germany than in Switzerland. In Germany, the class gap in life satisfaction narrowed between 1984 and 1990, strongly widened between 1990 and 2005 and then decreased again after 2010. In Switzerland, the class gap did not follow a clear time trend, but remained basically constant. In Germany, differences in unemployment risks and household income account for half of the class gap and its evolution over time.
    Keywords: Germany, inequality, life satisfaction, social class, Switzerland, unemployment, working class
    Date: 2017
  9. By: Titus J. Galama; Robson Morgan; Juan E. Saavedra
    Abstract: We document how an anti-poverty program improves economic and subjective wellbeing, and self-sufficiency. Familias en Accion Urbano, a conditional cash transfer program implemented at scale in the country of Colombia, uses a means-test cutoff score selection rule that provides exogenous variation in program participation. We reproduce the score assignment rule in a nationally representative living standards household survey that measures multiple dimensions of economic and evaluative wellbeing. Three years into the program, beneficiary households at the margin report greater income, consumption and formal employment participation for both the household head and partner. Household income increased by ten times the amount of the government transfer, likely because of gains in formal employment. Beneficiary households at the margin also report greater overall satisfaction with life, greater happiness and greater satisfaction with food. These results support the hypothesis that among households with basic unmet needs, policies that have a permanent impact on income and consumption may also have a lasting impact on subjective wellbeing and self-sufficiency. Moreover, relatively small subsidies, further offset by additional government tax receipt, may generate substantial benefits to poor families at a reduced cost to taxpayers.
    JEL: H53 I30 I32 I38 O38 O54
    Date: 2017–11

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