nep-hap New Economics Papers
on Economics of Happiness
Issue of 2018‒10‒15
three papers chosen by

  1. Relative Income and Happiness: An Experiment By Ifcher, John; Zarghamee, Homa; Houser, Daniel; Diaz, Lina
  2. Occupant Well-Being and House Values By Richard H. Rijnks; Stephen Sheppard
  3. Alternative Values-Based 'Recipes' for Life Satisfaction: German Results with an Australian Replication By Bruce Headey; Gert G. Wagner

  1. By: Ifcher, John (Santa Clara University); Zarghamee, Homa (Barnard College); Houser, Daniel (George Mason University); Diaz, Lina (George Mason University)
    Abstract: John Stuart Mill claimed that "men do not desire merely to be rich, but richer than other men." Do people desire to be richer than others? Or is it that people desire favorable comparisons to others more generally, and being richer is merely a proxy for this ineffable relativity? We conduct an online experiment absent choice in which we measure subjective wellbeing (SWB) before and after an exogenous shock that reveals to subjects how many experimental points they and another subject receive, and whether or not points are worth money. We find that subjects like receiving monetized points significantly more than non-monetized points but dislike being "poorer" than others in monetized and non-monetized points equally, suggesting relative money is valued only for the relative points it represents. We find no evidence that subjects like being "richer" than others. Subgroup analyses reveal women have a strong(er) distaste for being "richer" and "poorer" (than do men), and conservatives have a strong(er) distaste for being "poorer" (than do progressives). Our experimental-SWB approach is easy to administer and can provide some insights a revealed-preference approach cannot, suggesting that it may complement choice-based tasks in future experiments to better estimate preference parameters.
    Keywords: subjective well-being, relative income, others' income, income comparisons, happiness, experiments
    JEL: C91 D31 D63 I31
    Date: 2018–08
  2. By: Richard H. Rijnks (Univesity of Groningen); Stephen Sheppard (Williams College)
    Abstract: A difficulty in identifying the contribution of structure and neighborhood attributes to the market value of residential property is the lack of data on subjective characteristics of the neighborhood (friendliness of neighbors, proximity to friends and acquaintances) or difficult-to-observe subjective attributes of the structure itself (such as "curb appeal" or the presence of unpleasant odors). Concern may also arise from the understanding that the observed market price of most residential property is the result of a process of bargaining. A buyer who is optimistic by nature may assume that the quality of the neighborhood will be wonderful, or that the unusual odor will eventually go away, and therefore be willing to bid a higher price for the structure than a prospective buyer who is more nervous about all the ways that a house purchase can generate disappointment. Estimates of the value of structure or neighborhood attributes may tell us as much about the emotional affect of the buyer as they do about the actual costs or benefits of the attributes (or of cleaning or mitigating them). These observations suggest that incorporating data on the levels of subjective well being (SWB) and emotional affect of the buyers might be usefully applied to improve hedonic analysis of housing markets. The goal of this paper is to undertake such analysis and to explore the potential for improved analysis of the value of residential property. We make use of unique data collected as part of a multi-year analysis of health outcomes, matched with data on market transactions of residential property in three provinces of the Netherlands. We employ the spatial model developed by Kelejian and Prucha (2010) which allows us to incorporate a spatial error specification, as well explicitly control for possible endogeneity between the measure of SWB and the transaction price. By examining aggregate measures of SWB at different spatial scales, we obtain insights into whether these measurements are capturing subjective characteristics of the community, the neighborhood or the structure and the buyer who negotiateover the eventual price.
    Keywords: Housing markets, hedonic models, subjective well-being
    JEL: R31 I31 R32 R21
    Date: 2018–10
  3. By: Bruce Headey; Gert G. Wagner
    Abstract: In most research on Life Satisfaction (LS), it is assumed that the covariates of high and low LS are the same for everyone, or at least everyone in the West. In this paper, analysing data from the German Socio-Economic Panel, with a limited replication based on Australian panel data, we estimate models of alternative ‘recipes’ for LS. There appear to be at least four distinct ‘recipes’, which are primarily based on the values of different population sub-sets. These values are: altruistic values, family values, materialistic values and religious values. By a ‘recipe’ for LS we mean a linked set of values, behavioural choices and domain satisfactions, which appear to be held together by a person’s values, and which prove to have substantial effects on LS. Our German and Australian evidence indicates that individuals who follow recipes based on altruistic, family or religious values record above average long term LS, whereas the materialistic values ‘recipe’ is associated with below average LS.
    Keywords: life satisfaction, alternative recipes, values/life priorities, behavioural choices, domain satisfactions, panel data, SOEP
    JEL: C54 I30 Z13
    Date: 2018

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