nep-hap New Economics Papers
on Economics of Happiness
Issue of 2020‒08‒10
six papers chosen by
Viviana Di Giovinazzo
Università degli Studi di Milano-Bicocca

  1. The (Subjective) Well-Being Cost of Fiscal Policy Shocks By Kodjovi M. Eklou; Mamour Fall
  2. Exploring psychological well-being and poverty dynamics in South-Africa: evidence from NIDS waves 1-5 By Nik Stoop; Murray Leibbrandt; Rocco Zizzamia
  3. Has monetary policy made you happier? By Bunn, Philip; Haldane, Andrew; Pugh, Alice
  4. Parental Well-Being in Times of Covid-19 in Germany By Mathias Huebener; Sevrin Waights; C. Katharina Spiess; Nico A. Siegel; Gert G. Wagner
  5. Changes in South African well-being between 2008/9 and 2014/15: The evidence from expenditure and asset data By Motshidisi Nthatisi; Martin Wittenberg
  6. COVID-19 and Mental Health Deterioration among BAME groups in the UK By Eugenio Proto; Climent Quintana-Domeque

  1. By: Kodjovi M. Eklou; Mamour Fall
    Abstract: Do discretionary spending cuts and tax increases hurt social well-being? To answer this question, we combine subjective well-being data covering over half a million of individuals across 13 European countries, with macroeconomic data on fiscal consolidations. We find that fiscal consolidations reduce individual well-being in the short run, especially when they are based on spending cuts. In addition, we show that accompanying monetary and exchange rate policies (disinflation, depreciations and the liberalization of capital flows) mitigate the well-being cost of fiscal consolidations. Finally, we investigate the well-being consequences of the two well-knowns expansionary fiscal consolidations episodes taking place in the 80s (in Denmark and Ireland). We find that even expansionary fiscal consolidations can have well-being costs. Our results may therefore shed some light on why some governments may choose to consolidate through taxes even at the cost of economic growth. Indeed, if spending cuts are to generate a large well-being loss, they can trigger an opposition and protest against a fiscal consolidation plan and hence making it politically costly.
    Keywords: Fiscal consolidation;Tax increases;Fiscal policy;Gross capital formation;Economic conditions;Fiscal Consolidations,Subjective Well-Being,Spending cuts,Tax hikes,WP,life satisfaction,spend cut,tax hike,well-being
    Date: 2020–01–17
  2. By: Nik Stoop (Southern Africa Labour and Development Research Unit, University of Cape Town, South Africa. Institute of Development Policy, University of Antwerp, Belgium and Centre for Institutions and Economic Performance, University of Leuven, Belgium); Murray Leibbrandt (Southern Africa Labor and Development Research Unit, University of Cape Town. ARUA's African Centre of Excellence for Inequality Research, SALDRU, University of Cape Town.); Rocco Zizzamia (Southern Africa Labor and Development Research Unit, University of Cape Town. ARUA's African Centre of Excellence for Inequality Research, SALDRU, University of Cape)
    Abstract: The mechanisms that perpetuate poverty are still not well understood. An emerging literature focuses on the psychology of poverty, investigating psychological and behavioral factors that may affect poverty entry and make it difficult to escape poverty. This paper explores the relationship between psychological well-being and poverty in South Africa. We rely on Waves 1-5 of the National Income Dynamics Study (NIDS), a nationally representative household panel survey that spans a decade. A descriptive analysis shows a strong negative correlation between psychological well-being and per capita household expenditure, with individuals in lower expenditure deciles displaying significantly higher risks of depression and lower levels of life satisfaction. To identify causal effects, we turn to an econometric framework that accounts for endogenous initial poverty conditions, unobserved heterogeneity and non-random panel attrition. Preliminary results suggest that the risk of poverty significantly increases as psychological well-being deteriorates, and the other way around. We discuss a range of avenues for follow-up research.
    Date: 2019
  3. By: Bunn, Philip (Bank of England); Haldane, Andrew (Bank of England); Pugh, Alice (Bank of England)
    Abstract: Concerns were raised about the distributional impact of the loosening in UK monetary policy following the financial crisis. We assess the impact of this loosening on well-being using household-level data and estimated utility functions. The welfare benefits are found to have been positive, in aggregate and across most of the household distribution, relative to what otherwise would have happened. They are significantly larger than when looking at financial factors alone due to the non-financial benefits of lower unemployment and financial distress. Most people were made better-off in welfare terms from the monetary loosening, rich and poor, although the young have benefited more than the old.
    Keywords: Monetary policy; households; inequality; well-being
    JEL: D12 D31 E52 E58
    Date: 2020–07–17
  4. By: Mathias Huebener; Sevrin Waights; C. Katharina Spiess; Nico A. Siegel; Gert G. Wagner
    Abstract: We examine the differential effects of Covid-19 and related restrictions on individuals with dependent children in Germany. We specifically focus on the role of school and day care center closures, which may be regarded as a “disruptive exogenous shock” to family life. We make use of a novel representative survey of parental well-being collected in May and June 2020 in Germany, when schools and day care centers were closed but while other measures had been relaxed and new infections were low. In our descriptive analysis, we compare well-being during this period with a pre-crisis period for different groups. In a difference-in-differences design, we compare the change for individuals with children to the change for individuals without children, accounting for unrelated trends as well as potential survey mode and context effects. We find that the crisis lowered the relative well-being of individuals with children, especially for individuals with young children, for women, and for persons with lower secondary schooling qualifications. Our results suggest that public policy measures taken to contain Covid-19 can have large effects on family well-being, with implications for child development and parental labor market outcomes.
    Keywords: Well-being, Covid-19, Corona virus, day care closures, school closures, COMPASS, SOEP
    JEL: D1 H12 H75 I2
    Date: 2020
  5. By: Motshidisi Nthatisi (Poverty and Inequality Statistics, Statistics South Africa); Martin Wittenberg (School of Economics and DataFirst, University of Cape Town)
    Abstract: South Africa's Living Conditions Surveys (LCSs) are crucial instruments in monitoring the well-being of South Africa's population. Using expenditure as the yardstick for assessing well-being, the LCSs show a marked drop in poverty between 2008/09 and 2014/09. This would be a welcome trend. Unfortunately, the data collection method changed between these surveys so that there is at least some doubt as to whether the trend is real or due to measurement changes. Given that the expenditure modules are quite onerous for respondents this is an important question. In this paper we assess the reliability of the measured improvement of welfare by analysing also the information in the asset modules of these surveys. In comparison to the expenditure diaries the asset modules are much easier to complete and should therefore be much less prone to measurement error. We combine the information in the asset variables by constructing various asset indices and show that if these are used across the surveys they confirm that indeed average well-being has improved between 2008/09 and 2014/15.
    Keywords: poverty measurement, asset indices
    Date: 2019
  6. By: Eugenio Proto; Climent Quintana-Domeque
    Abstract: We use the UK Household Longitudinal Study and compare pre- (2017-2019) and post-COVID-19 data (April 2020) for the same group of individuals to assess and quantify changes in mental health among ethnic groups in the UK. We confirm the previously documented average deterioration in mental health for the whole sample of individuals interviewed pre- and post-COVID-19, and uncover four new facts. First, ethnicity predicts mental health deterioration when interacted with gender. Among men, BAME individuals experience a higher deterioration in mental health compared to British White individuals. However, among women, the deterioration in mental health is similar for both BAME and British White individuals. Second, the gender gap in mental health deterioration is only present among British White individuals and not among BAME individuals. Third, the drop in mental health among women and BAME men is very similar. Finally, there is substantial heterogeneity across BAME groups. The BAME group of Bangladeshi, Indian and Pakistani appears to be driving the difference in the gender gap in mental health deterioration between British White and BAME individuals. We call for additional research on the effects of the COVID-19 pandemic across different ethnic groups, and urge both policy makers and researchers to allocate resources to collect larger sample sizes of minority ethnic groups.
    Keywords: GHQ-12, wellbeing, mental health, mental distress, ethnicity, gender
    JEL: I1 J1 J15
    Date: 2020–07

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