nep-hap New Economics Papers
on Economics of Happiness
Issue of 2018‒03‒26
four papers chosen by
Viviana Di Giovinazzo
Università degli Studi di Milano-Bicocca

  1. Social capital as disease prevention By Stefano Bartolini
  2. How Conscious Are You of Others? Further Evidence on Relative Income and Happiness By Sun Youn Lee; Fumio Ohtake
  3. How Much Happiness can we find in the fear Index? By David Yechiam Aharon; Mahmoud Qadan
  4. Residential Satisfaction for a Continuum of Households: Evidence from European Countries By Borgoni, Riccardo; Michelangeli, Alessandra; Pirola, Federica

  1. By: Stefano Bartolini
    Abstract: Increasing demand for healthcare in developed countries raises concerns about the sustainability of spending on healthcare. Building on epidemiological, medical, economic, sociological and psychological research, I argue that a well-being and social capital crisis largely explains rising healthcare demand. There is compelling evidence that increasing dissatisfaction has caused an increase in morbidity and mortality rates in the US. A main policy recommendation is to tackle declining connections and the spread of social isolation in order to increase well-being and health. I review literature suggesting three domains where policies for social capital can be implemented: urban planning, schooling and regulation of advertising. Moreover, a crisis of trust between physicians and patients underlies the increasing phenomenon of defensive medicine that weighs substantially on healthcare spending. Policies aimed at tackling defensive medicine are discussed
    Keywords: health, morbidity, mortality, social capital, happiness, subjective well-being, objective well-being
    JEL: I10 I31 Z13
    Date: 2018–02
  2. By: Sun Youn Lee; Fumio Ohtake
    Abstract: Extant research has found that an individual’s happiness is relative with respect to income, suggesting that it rises with own income and falls as the income of a reference group increases. Some recent studies emphasize that the effect of relative income is mediated by the extent to which people compare themselves with others (hereinafter, “relative consciousness”). Using the survey data of representative sample of Japan and the U.S., this paper extends the existing literature by providing a statistical evidence that underlines the importance of the intensity of relative consciousness in association with the perception of reference-group income in determining an individual’s happiness and his/her decision in line with the maximization of the utility. First, we find people who are highly conscious of others’ living standards are unhappier in Japan but happier in the U.S. This opposite effect between the two countries is also found to exist when the same estimation is conducted with panel data. Second, the positive relationship between relative consciousness and happiness found in the U.S. results from the perception of reference-group income: highly conscious people compare downward in the U.S. Lastly, we further examine the extent to which the integrated effect of relative consciousness and reference-group income is related to an individual’s decision that could affect the degree of happiness. We discuss how our results can drive a wedge between choice behavior and happiness maximization and thus between happiness and decision utility.
    Date: 2018–03
  3. By: David Yechiam Aharon (Ono Academic College); Mahmoud Qadan (Univeristy of Haifa)
    Abstract: Many studies dealing with calendar market anomalies have ascribed positive or negative patterns detected in returns to investors? moods. However, in these studies, mood was not measured directly but rather speculated upon or inferred. This paper suggests capturing investors? moods by dividing the information contained in the VIX, popularly called the fear index, into two components: that which is correlated with volatility forecasts and information that is not. By doing so, we provide further evidence about the relationship between investor mood and risk aversion around joyful occasions (holidays) as well as for other occasions that may result in negative moods (the disruption of sleep resulting from the move to and from daylight savings time). We find that the actual values of the VIX and its cousin, the VXO, tend to be lower than their expected values in the case of joyful holidays, reflecting a more optimistic mood among investors, while during daylight savings time weekends, the actual values of the VIX and VXO tend to be higher than their theoretical values. Our results shed light on the information content of implied volatility beyond that captured in other volatility estimators.
    Keywords: Financial markets; Mood; Behavioral finance; Holiday effect, Risk aversion, Stock returns
    JEL: G10 G02 G14
    Date: 2017–10
  4. By: Borgoni, Riccardo; Michelangeli, Alessandra; Pirola, Federica
    Abstract: Residential satisfaction depends on housing and neighborhood conditions in addition to housing cost affordability. To determine the relative importance of these factors, their average effect is usually estimated using sample data, eventually split in sub-samples in order to represent social classes. In this paper, within the theoretical framework of subjective well-being, we propose a novel empirical strategy independent of the concept of social class, able to estimate how the effect of drivers of residential satisfaction change on continuous according to households' income. We apply our methodology to investigate residential satisfaction in 23 European countries using 2012 EU-SILC module on housing conditions.
    Keywords: housing,subjective well-being,Europe,EU-SILC Survey
    JEL: R11 R12 R23
    Date: 2018

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