nep-hap New Economics Papers
on Economics of Happiness
Issue of 2018‒05‒28
four papers chosen by

  1. Why Do Immigrants Report Lower Life Satisfaction? By Yaman, F.; Cubi-Molla, P.
  2. Sustainable economic policy and well-being: The relationship between adjusted net savings and subjective well-being By Mubashir Qasim; Arthur Grimes
  3. Moving towards happiness By Arthur Grimes; Dennis Wesselbaum
  4. Family matters: involuntary parental unemployment during childhood and subjective well-being later in life By Nikolova, Milena; Nikolaev, Boris N.

  1. By: Yaman, F.; Cubi-Molla, P.
    Abstract: Questions of happiness and well-being have increasingly been drawing the attention of health economists, with the understanding that its measures approximate quality of life, or at any rate is one of its major components. Happiness in surveys is typically reported as a rating scale. For instance, life satisfaction question at the German Socio-Economic Panel (SOEP) states as follows - "How satisfied are you at present with your life as a whole?" The respondents can then answer this question with an integer number (or category) between 0 and 10, with 0 being the lowest and 10 the highest level of life satisfaction. It is typically assumed that for a particular latent value of life satisfaction, the individual will report the same category (e.g. "8") regardless the time of the survey. However, recent research has questioned this, suggesting that the respondent may not use the same evaluation criteria when assessing her life satisfaction at different points in time. For instance, the same level of life satisfaction can be reported as 8 today but as 7 in a year from today, if the person is becoming more demanding. Therefore, a simplistic analysis between both responses would wrongly conclude that the respondent's life satisfaction is decreasing. A new OHE Research paper by Cubi-Molla and Yaman (2017) explores changes in the reporting behaviour of immigrants in Germany 1984-2010, in questions related to life satisfaction. Previous literature suggests that immigrants' happiness tends to decrease over time compared to the natives'. The authors firstly explore the robustness and origin of this finding, and then propose a model that has the potential to decompose the effect of the number of years since migration into a true change in life satisfaction and a simple change in reporting behaviour. The model suggests that the existence and size of the reporting bias depend on how accurately individuals remember their past life satisfaction.
    Keywords: Health Statistics and Data Analyses
    JEL: I1
    Date: 2017–07–01
  2. By: Mubashir Qasim (University of Waikato); Arthur Grimes (Motu Economic and Public Policy Research)
    Abstract: We analyse the relationship between subjective wellbeing (SWB) and the World Bank’s measure of a country’s economic sustainability, adjusted net savings (ANS). We model SWB at individual level and at aggregated group level as a function of past ANS levels, after controlling for a country’s initial levels of SWB. The empirical models utilise World Values Surveys (WVS) data for self-reported life-satisfaction (our proxy for SWB). Our results show that ANS is negatively associated with future SWB outcomes over relatively short timespans (10-15 years) but this relationship is neutralised, or even reversed, for a longer timespan (20 years). The results demonstrate an important challenge in political economy. Governments that choose to save less in the short term may be able to spend more on the well-being of the current generation (i.e. current voters) but they diminish the reserves available to improve future generations’ well-being. At a more technical level, our results reinforce the concept that ANS is a useful sustainability indicator for infinite (or at least very long) time horizons, but it is not a good indicator of well-being developments over short time horizons.
    Keywords: Adjusted net savings, subjective wellbeing, intergenerational sustainability
    JEL: L92 L96 N97
    Date: 2018–05
  3. By: Arthur Grimes (Motu Economic and Public Policy Research); Dennis Wesselbaum (University of Otago)
    Abstract: We add to the literature on the driving forces of international migration. While the existing literature establishes that income differences, migration costs, and certain other factors (e.g. climate or human rights) affect the migration decision, we focus on the broader role of nonpecuniary factors. We include well-being measures in a standard model of bilateral migration flows and enrich the analysis further by testing the effects on migration of inequality in happiness within a country. Our findings that both the mean and standard deviation of happiness - in both origin and destination countries - help explain bilateral migration flows over and above any income effect, indicates the need to incorporate both pecuniary and non-pecuniary factors when modelling migration choices.
    Keywords: Happiness, International Migration, Wellbeing.
    JEL: F22 O15 Q54
    Date: 2018–05
  4. By: Nikolova, Milena; Nikolaev, Boris N.
    Abstract: We are the first to examine how parental unemployment experienced during early-, mid- and late-childhood affects adult life satisfaction. Using German household panel data, we find that parental unemployment induced by plant closures and experienced during early (0-5 years) and late (11-15 years) childhood leads to lower life satisfaction at ages 18-31. Nevertheless, parental unemployment can also have a positive effect depending on the age and gender of the child. Our results are robust even after controlling for local unemployment, individual and family characteristics, parental job loss expectations, financial resources, and parents’ working time when growing up. These findings imply that the adverse effects associated with parental unemployment experienced at a young age tend to last well into young adulthood and are more nuanced than previously thought.
    Keywords: life satisfaction,parental unemployment,company closures,life-cycle analysis,German Socio-Economic Panel
    JEL: I31 J01 J65
    Date: 2018

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