nep-hap New Economics Papers
on Economics of Happiness
Issue of 2020‒01‒06
eleven papers chosen by
Viviana Di Giovinazzo
Università degli Studi di Milano-Bicocca

  1. Better Off? Distributional Comparisons for Ordinal Data about Personal Well-Being By Jenkins, Stephen P.
  2. Do(n’t) Worry, It’s Temporary: The Effects of Fixed‑Term Employment on Affective Well‑Being By Paul Schumann; Lars Kuchinke
  3. Measuring and Using Happiness to Support Public Policies By John F. Helliwell
  4. Inequality Comparisons with Ordinal Data By Jenkins, Stephen P.
  5. Happier with less? Members of European environmental grassroots initiatives reconcile lower carbon footprints with higher life satisfaction and income increases By Vita, Gibran; Ivanova, Diana; Dumitru, Adina; Mira, Ricardo García; Carrus, Giuseppe; Stadler, Konstantin; Krause, Karen; Wood, Richard; Hertwich, Edgar
  6. Non-parametric well-being comparisons By Koen Decancq; Annemie Nys
  7. Estimating Endogenous Effects on Ordinal Outcomes By Andrew Chesher; Adam Rosen; Zahra Siddique
  8. Program evaluation and ethnic differences: the Pension 65 program in Peru By Koen Decancq; Javier Olivera; Erik Schokkaert
  9. Income Volatility, Health and Well-Being By Adeline, Amelie; Crèvecoeur, Ismael Choinière; Fonseca, Raquel; Michaud, Pierre-Carl
  10. Using Massive Online Choice Experiments to Measure Changes in Well-being By Brynjolfsson, Erik; Collis, Avinash; Eggers, Felix
  11. Effect of Income Gap: Happiness, Cost and Midlife Crisis By wang, lugang

  1. By: Jenkins, Stephen P. (London School of Economics)
    Abstract: How to undertake distributional comparisons when personal well-being is measured using income is well-established. But what if personal well-being is measured using subjective well-being indicators such as life satisfaction or self-assessed health status? Has average well-being increased or well-being inequality decreased? How does the distribution of well-being in New Zealand compare with that in Australia, or between young and old people in New Zealand? This paper addresses questions such as these, stimulated by the increasing weight put on subjective well-being measures by international agencies such as the OECD and national governments including New Zealand's. The paper reviews the methods appropriate for distributional comparisons in the ordinal data context, comparing them with those routinely used for comparisons of income distributions. The methods are illustrated using data from the World Values Survey.
    Keywords: inequality, ordinal data, subjective well-being, life satisfaction, World Values Survey
    JEL: D31 D63 I31
    Date: 2019–11
  2. By: Paul Schumann; Lars Kuchinke
    Abstract: This paper examines the impact of fixed-term employment on the affective and cognitive well-being of employees operationalized by the subjective frequency of the basic emotions of happiness, sadness, fear and anger as well as life satisfaction. Longitudinal effects were analysed across 10 waves of sampling from the Socio-Economic Panel (SOEP), an annual representative survey in Germany. Random effects within between model (REWB) analyses were applied to examine differences between fixed-term and permanent workers as well as within effects of a change of contract type. In addition, the impact of the direction of contract type change was evaluated by examining subsamples with changes from fixed-term to permanent and vice versa. The results suggest that fixed-term employees’ affective well-being is lower, while cognitive well-being (or happiness) is hardly affected. A change from permanent to fixed-term contracts is associated with higher frequencies of self-reported fear and sadness experiences, while a change in the opposite direction results in lower frequencies. In addition, life satisfaction was only found to increase with the change from fixed-term to permanent employment. While the effect on fear is masked by job security, acting as a mediating factor, the effect on sadness remains significant when the model is controlled for job security. Thus, by treating cognitive and affective well-being as separate constructs this study provides new insights into the psychological costs of fixed-term contracts and reveals the strong impact of fixed-term employment on self-reported experiences of sadness.
    Keywords: fixed-term employment, affective well-being, job security, job change, cognitive well-being, life satisfaction, hybrid models
    Date: 2019
  3. By: John F. Helliwell
    Abstract: This paper summarizes the philosophical and empirical grounds for giving a primary role to the evaluations that people make of the quality of their lives. These evaluations permit comparisons among communities, regions, nations and population subgroups, enable the estimation of the relative importance of various sources of happiness, and provide a well-being lens to aid the choice of public policies to support well-being. Available results expose the primacy of social determinants of happiness, and especially the power of generosity and other positive social connections to improve the levels, distribution and sustainability of well-being.
    JEL: D6 I31 Z18
    Date: 2019–12
  4. By: Jenkins, Stephen P. (London School of Economics)
    Abstract: Non-intersection of appropriately-defined Generalized Lorenz (GL) curves is equivalent to a unanimous ranking of distributions of ordinal data by all Cowell and Flachaire (Economica 2017) indices of inequality and by a new index based on GL curve areas. Comparisons of life satisfaction distributions for six countries reveal a substantial number of unanimous inequality rankings.
    Keywords: inequality, ordinal data, subjective well-being, life satisfaction, World Values Survey
    JEL: D31 D63 I31
    Date: 2019–11
  5. By: Vita, Gibran; Ivanova, Diana; Dumitru, Adina; Mira, Ricardo García; Carrus, Giuseppe; Stadler, Konstantin; Krause, Karen; Wood, Richard; Hertwich, Edgar (Norwegian University of Science and Technology)
    Abstract: Scientists and policymakers recognize the need to address consumption and lifestyles in order to reconcile environmental and development agendas. Sustainability-oriented grassroots initiatives emerge bottom-up to create opportunities for sustainable lifestyles; yet no prior assessment has ascertained the efficacy of their members to reduce carbon footprints (CF) and enhance well-being. We compare the CF of non-members and members of grassroots initiatives in the domains of food, clothing, housing and transport. We further compare the groups by testing the influence of socio-economic variables that are typically associated with both footprint and well-being. Here we show that grassroots initiative members have 16% lower total carbon footprint, and 43% and 86% lower carbon footprints for food and clothing respectively, compared to their “non-member” regional sociodemographic counterparts. We find a higher adoption of some energy-saving behaviors for initiative members such as greater active travel distance and lower indoor temperatures in the winter, yet no significant differences in the CF of housing and transport. Interestingly, increases in income are not associated with increases in the total CF of members, while the influence of income is confirmed for the CF of the total sample. Instead, factors such as age, household size, and gender better explain the variation in the domain-specific CFs of initiative members. Finally, members show higher life satisfaction compared to non-members and are 11–13% more likely to evaluate their life positively. Our results suggest that initiative members uncover lifestyle features that not only enable lower emissions, but also reconcile emissions with income and well-being.
    Date: 2019–10–31
  6. By: Koen Decancq; Annemie Nys
    Abstract: We study the problem of making interpersonal well-being comparisons when individuals have heterogeneous preferences. We present a robust criterion for interpersonal well-being comparisons that states that one individual is better off than another one if the intersection between the extended upper contour set of the better off individual and the extended lower contour set of the worse off individual is empty. We implement the criterion in the consumption-health space using an online survey with 2,260 respondents in the United States to investigate how complete the resulting interpersonal well-being comparison is. To chart the contour sets of the respondents, we propose a new “adaptive bisectional dichotomous choice” (ABDC) procedure that is based on a limited number of dichotomous choices and some mild non-parametric assumptions on the preferences. We find that between one fifth and half of all pairs of respondents can be ranked with the criterion.
    Date: 2019–07–22
  7. By: Andrew Chesher (Institute for Fiscal Studies and University College London); Adam Rosen (Institute for Fiscal Studies and Duke University); Zahra Siddique (Institute for Fiscal Studies)
    Abstract: Recent research underscores the sensitivity of conclusions drawn from the application of econometric methods devised for quantitative outcome variables to data featuring ordinal outcomes. The issue is particularly acute in the analysis of happiness data, for which no natural cardinal scale exists, and which is thus routinely collected by ordinal response. With ordinal responses, comparisons of means across di?erent populations and the signs of OLS regression coe?cients have been shown to be sensitive to monotonic transformations of the cardinal scale onto which ordinal responses are mapped. In many applications featuring ordered outcomes, including responses to happiness surveys, researchers may wish to study the impact of a ceteris paribus change in certain variables induced by a policy shift. Insofar as some of these variables may be manipulated by the individuals involved, they may be endogenous. This paper examines the use of instrumental variable (IV) methods to measure the e?ect of such changes. While linear IV estimators suffer from the same pitfalls as averages and OLS coe?cient estimates when outcome variables are ordinal, nonlinear models that explicitly respect the ordered nature of the response variable can be used. This is demonstrated with an application to the study of the effect of neighborhood characteristics on subjective well-being among participants in the Moving to Opportunity housing voucher experiment. In this context, the application of nonlinear IV models can be used to estimate marginal effects and counterfactual probabilities of categorical responses induced by changes in neighborhood characteristics such as the level of neighborhood poverty.
    Date: 2019–11–29
  8. By: Koen Decancq; Javier Olivera; Erik Schokkaert
    Abstract: We show that the introduction of a non-contributory pension program (Pension 65) in Peru had remarkably different effects for its three main ethnic groups, i.e., Mestizo, Quechua, and Aymara. The Aymara beneficiaries of the program have experienced larger increases in health and life satisfaction compared to other Peruvians. Using a panel life satisfaction regression, we find evidence for preference heterogeneity between the Aymara and the other ethnic groups that is consistent with the observed differences. Finally, we turn to the question of how the pension program can be evaluated in a robust manner while respecting the preference heterogeneity between the ethnic groups. We propose the natural criterion that a program benefits a recipient if she is lifted to a higher indifference curve. We show that the pension program was beneficial for all groups, but that more Aymara beneficiaries were lifted to a higher indifference curve compared to other Peruvians. Our proposed criterion can be useful to evaluate programs in all cases where preference differences matter.
    Date: 2018–11–27
  9. By: Adeline, Amelie (University of Cergy-Pontoise); Crèvecoeur, Ismael Choinière (University of Québec at Montréal); Fonseca, Raquel (University of Québec at Montréal); Michaud, Pierre-Carl (HEC Montreal)
    Abstract: While there is mounting evidence that large income shocks, e.g. in the form of a job loss, may impact health and mortality, little evidence exist on the potential relationship between sustained income volatility, keeping average lifetime income constant, and health. This paper exploits rich survey data on the near-elderly in Canada paired with their administrative tax records to investigate whether a relationship exists between health and well-being on the one hand, and individual-specific volatility of income on the other, decomposing volatility into a permanent and transitory component. Controlling for average lifetime income, we find that a one unit increase in the standard deviation of the permanent component of (log) income experienced over the working life is associated with a lower probability of being in excellent (-23.9%) and very good health (-13.3%), to be satisfied with life (-34.9%), and implies the onset of 1.1 additional mental health issues. Similar results, albeit smaller in size, are found for the transitory component of income. These results have potentially important implications for public policy, as well as, understanding the relationship between the labor market and population health.
    Keywords: income volatility, health, well-being, Canada
    JEL: C22 D31 I10 I14 I31
    Date: 2019–12
  10. By: Brynjolfsson, Erik; Collis, Avinash; Eggers, Felix
    Abstract: GDP and derived metrics such as productivity have been central to our understanding of economic progress and well-being. In principle, changes in consumer surplus provide a superior, and more direct, measure of changes in well-being, especially for digital goods. In practice, these alternatives have been difficult to quantify. We explore the potential of massive online choice experiments to measure consumer surplus. We illustrate this technique via several empirical examples which quantify the valuations of popular digital goods and categories. Our examples include incentive compatible discrete choice experiments where online and lab participants receive monetary compensation if and only if they forgo goods for pre-defined periods. For example, the median user needed a compensation of about $48 to forgo Facebook for one month. Our overall analyses reveal that digital goods have created large gains in well-being that are not reflected in conventional measures of GDP and productivity. By periodically querying a large, representative sample of goods and services, including those which are not priced in existing markets, changes in consumer surplus and other new measures of well-being derived from these online choice experiments have the potential for providing cost-effective supplements to the existing National Income and Product Accounts.
    Date: 2019–04–09
  11. By: wang, lugang
    Abstract: Personal happiness, economic and social behavior and organizational behavior are widely concerned. New concepts and tools are defined such as ability income, expected income, expected difference, and income gap. With these new tools, this paper provides an in-depth analysis of common social and economic issues: statistics on the gap between rich and poor, midlife crisis, lifelong learning, layoff, happiness-income paradox, U-shaped curve of happiness, pension systems, seniority-wage system, and so on. The happiness does not depend on the actual income, but mainly depends on expected difference. Income gap increases the cost of the organization.
    Date: 2019–08–04

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