nep-hap New Economics Papers
on Economics of Happiness
Issue of 2018‒06‒25
three papers chosen by

  1. The Shadow Prices of Voluntary Caregiving: Using Panel Data of Well-Being to Estimate the Cost of Informal Care By McDonald, Rebecca; Powdthavee, Nattavudh
  2. Long-run Effects of Lottery Wealth on Psychological Well-being By Lindqvist, Erik; Östling, Robert; Cecarini, David
  3. Why Some Countries Have More Billionaires Than Others? (Explaining Variations in Billionaire Intensity of GDP) By Popov, Vladimir

  1. By: McDonald, Rebecca (University of Birmingham); Powdthavee, Nattavudh (University of Warwick)
    Abstract: This paper uses the wellbeing valuation (WV) approach to estimate and monetize the wellbeing impacts of informal care provision on caregivers. Using nationally representative longitudinal data from the U.K., we address two challenging methodological issues related to the economic valuation of informal care: (i) the endogeneity of informal care; and (ii) the sensitivity of income estimates used in valuation. We address the endogeneity issue by decomposing wellbeing losses into those associated with caring for a relative who had recently suffered a serious accident and those associated with caring for a relative who had not had an accident. We use of the Fixed Effects Filtered (FEF) estimator to enable the permanent income coefficient to be estimated free from individual fixed effects bias. This estimate is used instead of the transient income effect in the calculation of shadow prices of informal care. Our estimates suggest that permanent income would have to increase by approximately £102k per year on average to just compensate for the wellbeing losses from providing informal care.
    Keywords: informal care, well-being, compensation variations, permanent income, happiness, shadow prices
    JEL: H8 I18 I31
    Date: 2018–05
  2. By: Lindqvist, Erik (Department of Economics); Östling, Robert (Institute for International Economic Studies); Cecarini, David (Department of Economics)
    Abstract: We surveyed a large sample of Swedish lottery players about their psychological well-being and analyzed the data following pre-registered procedures. Relative to matched controls, large-prize winners experience sustained increases in overall life satisfaction that persist for over a decade and show no evidence of dissipating with time. The estimated treatment effects on happiness and mental health are significantly smaller, suggesting that wealth has greater long-run effects on evaluative measures of well-being than on affective ones. Follow-up analyses of domain-specific aspects of life satisfaction clearly implicate financial life satisfaction as an important mediator for the long-run increase in overall life satisfaction.
    Keywords: Psychological Well-being; Subjective Well-being; Happiness
    JEL: D69 I31
    Date: 2018–06–18
  3. By: Popov, Vladimir
    Abstract: The list of billionaires and their wealth published by Forbes magazine in the US allows to compute the number of billionaires per unit of GDP and the ratio of their wealth to GDP for various countries. These measures of billionaire intensity vary greatly - sometimes by one or even two orders of magnitude. The paper offers descriptive statistics of geographical distribution of billionaires and a preliminary analysis of factors determining the country variations of billionaire intensity indicators. Rich and well developed tax havens, like Monaco, Hong Kong, Guernsey, Cyprus, Lichtenstein, attract a lot of billionaires, but other less developed countries with zero or low personal income taxes (Persian Gulf states – Bahrain, Kuwait, Oman, Qatar, UAE) do not have many billionaires. Unsurprisingly, happiness index, especially such determinant of the index as healthy life expectancy, is a strong predictor of the concentration of wealth in particular countries. Surprisingly, other determinants of happiness index, such as per capita income and social support, do not matter much, whereas personal freedom does matter, but has the “wrong” sign (the lower is personal freedom, the higher the billionaire intensity). Another unexpected result is the negative relationship between billionaire intensity and inequality of income distribution as measured by Gini coefficient derived from household surveys: billionaires seem to prefer countries with lower income inequalities. The presence of billionaires, though rises income inequality at the very top by definition, does not increase general income inequality. Long term trends in the billionaire intensity, appear to mirror changes in within the country income inequalities as measured by gini coefficient: increase before the First World War, decrease until the 1980s and then the new rise.
    Keywords: Income inequalities, billionaire intensity, tax rates, happiness index, murders
    JEL: I3 I31
    Date: 2018–06–01

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