nep-hap New Economics Papers
on Economics of Happiness
Issue of 2020‒11‒23
two papers chosen by
Viviana Di Giovinazzo
Università degli Studi di Milano-Bicocca

  1. The Age Profile of Life-satisfaction After Age 65 in the U.S. By Péter Hudomiet; Michael D. Hurd; Susann Rohwedder
  2. Natural Hazard Risk and Life Satisfaction - Empirical Evidence for U.S. Hurricanes By Eurich, Marina; Berlemann, Michael

  1. By: Péter Hudomiet; Michael D. Hurd; Susann Rohwedder
    Abstract: Although income and wealth are frequently used as indicators of well-being, they are increasingly augmented with subjective measures such as life satisfaction to capture broader dimensions of individuals’ well-being. Based on data from large surveys of individuals, life satisfaction in cross-section increases with age beyond retirement into advanced old age. It may seem puzzling that average life satisfaction would be higher at older ages because older individuals are more likely to experience chronic or acute health conditions, or the loss of a spouse. Accordingly, this empirical pattern has been called the “paradox of well-being.” We examine the age profile of life satisfaction of the U.S. population age 65 and older in the Health and Retirement Study (HRS) and also find increasing life satisfaction at older ages in cross-section. But based on the longitudinal dimension of the HRS life satisfaction significantly declines with age and the rate of decline accelerates with age. Widowing and health shocks play important roles in this decline. We reconcile the cross-section and longitudinal measurements by showing that both differential mortality and differential non-response bias the cross-sectional age profile upward: individuals with higher life satisfaction and in better health tend to live longer and to remain in the survey, causing average values to increase. We conclude that the optimistic view about increasing life satisfaction at older ages based on cross-sectional data is not warranted.
    JEL: I14 I31 J14
    Date: 2020–10
  2. By: Eurich, Marina; Berlemann, Michael
    Abstract: The ongoing process of climate change goes along with an increase in the frequency and severity of various sorts of natural disasters. While the existing literature has almost exclusively focused on studying the direct effects resulting from different types of disasters, the effect of changing disaster risk so far has largely been neglected. In this paper we study the effect of hurricane risk on individual self-reported life satisfaction. In order to do so we combine geo-referenced survey data from the U.S. Gallup Daily Survey and hurricane data for the United States. Using Willoughby's (2006) wind field model we construct time-varying indicators of hurricane risk on the zip-code-level for the period of 2010 to 2018, based on historical hurricane data. We then study whether the time-varying hurricane risk indicators affect self-reported life satisfaction in a two-way fixed effects model. Our findings indicate that regions with comparatively high hurricane risk report significantly lower levels of life satisfaction than their counterparts in less hurricane-prone regions, even after controlling for zip-code-specific, time-specific and individual-specific differences. Thus, the impacts of natural disasters on life satisfaction tend to be underestimated when focusing on the direct effects exclusively.
    Keywords: Hurricane risk,Life Satisfaction,Global Warming
    JEL: Q54 I31
    Date: 2020

This nep-hap issue is ©2020 by Viviana Di Giovinazzo. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.