nep-hap New Economics Papers
on Economics of Happiness
Issue of 2022‒02‒21
seven papers chosen by

  1. Analyzing subjective well-being data with misclassification By Oparina, Ekaterina; Srisuma, Sorawoot
  2. Subjective well-being and climate change: Evidence for Portugal By Ary José A. Souza-Jr.
  3. Footsie, yeah! Share prices and worker wellbeing By Alex Bryson; Andrew E. Clark; Colin Green
  4. COVID-19 school closures and mental health of adolescent students: Evidence from rural Mozambique By Chimbutane, Feliciano; Herrera-Almanza, Catalina; Karachiwalla, Naureen; Lauchande, Carlos; Leight, Jessica
  5. Can survey design reduce anchoring bias in recall data? Evidence from Malawi By Godlonton, Susan; Hernandez, Manuel A.; Paz, Cynthia
  6. Going solo: how starting solo self-employment affects incomes and well-being By Jonathan Cribb; Xiaowei Xu
  7. Inequality and psychological well-being in times of COVID-19: evidence from Spain By Monica Martinez-Bravo; Carlos Sanz

  1. By: Oparina, Ekaterina; Srisuma, Sorawoot
    Abstract: We use novel nonparametric techniques to test for the presence of non-classical measurement error in reported life satisfaction (LS) and study the potential effects from ignoring it. Our dataset comes from Wave 3 of the UK Understanding Society that is surveyed from 35,000 British households. Our test finds evidence of measurement error in reported LS for the entire dataset as well as for 26 out of 32 socioeconomic subgroups in the sample. We estimate the joint distribution of reported and latent LS nonparametrically in order to understand the misreporting behavior. We show this distribution can then be used to estimate parametric models of latent LS. We find measurement error bias is not severe enough to distort the main drivers of LS. But there is an important difference that is policy relevant. We find women tend to over-report their latent LS relative to men. This may help explain the gender puzzle that questions why women are reportedly happier than men despite being worse off on objective outcomes such as income and employment.
    Keywords: Identification; Measurement error; Subjective well-being; Testing
    JEL: C14 C51 I31
    Date: 2020–12–21
  2. By: Ary José A. Souza-Jr.
    Abstract: This paper analyses the impact of air pollution, climate conditions, and extreme weather events on subjective well-being across the Portuguese regions through estimating an ordered probit model. The estimation applies data at the individual level from the 8th and 9th waves of the European Social Survey, along with an air quality indicator, environmental variables, national forest inventory, and a study about the possible future effects of the sea-level rise on vulnerable areas and people living therein. Even after controlling for socio-economic variables and personal traits, the results suggest the existence of differences between regional welfare levels. Air pollution has a negative impact on life satisfaction due to its bad impacts on health (aggravating the condition of individuals with heart and lung diseases). The paper’s key finding is to show that at the regional level, both past (forest fires) and «possible» future (floods due to sea-level rise) extreme weather events may impact the current welfare level. Also, assessments of implicit willingness do to pay demonstrate that climate change effects have a relevant impact on their quality of life nowadays.
    Keywords: climate, extreme, region, flood, fire.
    Date: 2022–02
  3. By: Alex Bryson (UCL - University College of London [London]); Andrew E. Clark (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Colin Green (NTNU - Norwegian University of Science and Technology [Aalesund] - NTNU - Norwegian University of Science and Technology)
    Abstract: Purpose A small literature has shown that individual wellbeing varies with the price of company stock, but it is unclear whether this is due to wealth effects amongst those holding stock, or more general effects on sentiment, with individuals taking rising stock prices as an indicator of improvements in the economy. The authors contribute to this literature by using two data sets to establish the relationship between share prices on the one hand and worker wellbeing on the other. Design/methodology/approach First, the authors use over 20 years of British panel data to show that employee happiness and job satisfaction moves with share prices among those whose pay is partly determined by company fortunes. The authors then examine share price movements and employee stock holding in a single corporation and provide suggestive evidence that an increase in the firm's stock price increases the well-being of those who belong to its employee share purchase plan (ESPP). These effects are greatest among those making the largest monthly contributions to the program who have the most to gain (or lose) from stock price fluctuations. There is also tentative evidence that the well-being effects of a higher share price are larger for those who hold more shares. Taken together these results suggest that, although stock price movements have little effect on well-being in the population at large, the well-being of those holding stock in their own company rises when the price of that stock is higher, suggesting the effects of share prices work at least partly via changes in wealth. Findings Taken together these results suggest that the wellbeing effects of share prices work at least partly via changes in wealth. Research limitations/implications The authors cannot be certain that the job satisfaction movements they see are causally linked to share plan participation and bonus receipt. Future research might fruitfully examine the mechanisms at play, and whether the effects identified here are linked to differences in employee motivation and effort over the business cycle. Practical implications Firms may wish to consider the appropriateness of linking their workers' pay to firm performance through share plans or profit shares to establish whether this improves worker wellbeing. Social implications The utility of workers may increase where firms offer some compensation via a share plan or profit share. Originality/value The literature suggests a link between share price movements and worker wellbeing, but the reasons for the link are contested. Using two very different data sources, the authors are able to show that share price increases induce higher worker wellbeing, at least in part, through wealth effects.
    Keywords: Job satisfaction,Profit Sharing,Share prices,Worker wellbeing
    Date: 2021–10
  4. By: Chimbutane, Feliciano; Herrera-Almanza, Catalina; Karachiwalla, Naureen; Lauchande, Carlos; Leight, Jessica
    Abstract: The onset of the COVID-19 pandemic, entailing widespread school closures as well as acute disruptions to household livelihoods, has presumably had substantial consequences for adolescent well-being in developing country contexts that remain largely unexplored. We present novel evidence about the prevalence of mental health challenges among adolescent students as well as educators in rural Mozambique using data from an in-person survey conducted in 175 schools. In our sample, 31% of students report low levels of well-being (though only 10% suffer from high anxiety): students enrolled in schools that used a wider variety of distance learning measures report lower anxiety, while students reporting familial shocks linked to the pandemic report higher anxiety and lower well-being. Educators experience comparatively lower levels of anxiety and higher well-being, and household-level shocks are most predictive of variation in mental health. However, well-being is negatively affected by the range of hygiene-related measures implemented in schools upon reopening.
    Keywords: MOZAMBIQUE; SOUTHERN AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; Coronavirus; coronavirus disease; Coronavirinae; COVID-19; mental health; rural areas; adolescents; students; school closures
    Date: 2021
  5. By: Godlonton, Susan; Hernandez, Manuel A.; Paz, Cynthia
    Abstract: Recall biases in retrospective survey data are widely considered to be pervasive and have important implications for effective agricultural research. In this paper, we leverage the survey design literature and test three strategies to attenuate mental anchoring in retrospective data collection: question order effects, retrieval cues, and aggregate (community) anchoring. We embed a survey design experiment in a longitudinal survey of smallholder farmers in Malawi and focus on anchoring bias in maize production and happiness exploiting differences between recalled and concurrent responses. We find that asking for retrospective data before concurrent data reduces recall bias by approximately 34% for maize production, a meaningful improvement with no increase in survey data collection costs. Retrieval cues are less successful in reducing the bias for maize reports and involve more data collection time, while community anchors can exacerbate the bias. Reversing the order of questions and retrieval cues do not help to ease the bias for happiness reports.
    Keywords: MALAWI; SOUTHERN AFRICA; AFRICA SOUTH OF SAHARA; AFRICA; survey design; smallholders; farmers; surveys; maize; crops; recall bias; mental anchoring; recall data
    Date: 2021
  6. By: Jonathan Cribb (Institute for Fiscal Studies and Institute for Fiscal Studies); Xiaowei Xu (Institute for Fiscal Studies)
    Abstract: Using a large-scale panel data set, we trace the evolution of incomes and well-being around the entry into ‘solo self-employment’ – that is, running a business without employees. We find that solo self-employment is used to self-insure against employment shocks: employment rates fall and poverty rates rise in the run-up to entry, and many who fell out of employment report being dismissed or made redundant from their previous job. However, their average earnings do not fully recover within three years of entry. For those who move into solo self-employment directly from employee jobs, for whom this transition is more likely to have been voluntary, earnings remain lower and poverty rates higher for at least two years after entry. Despite the effect on incomes, becoming solo self-employed is associated with improvements in well-being across a number of measures. We see a large and sustained rise in job satisfaction, even among groups who are likely to be using solo self-employment to self-insure. Comparing entries into solo self-employment with entries into or moves between employee jobs, we find that well-being trajectories are remarkably similar despite significantly lower earnings in solo selfemployment. This suggests that there may be intangible benefits that compensate for lower earnings, that (on average) apply even to those who are ‘pushed’ into solo self-employment.
    Date: 2020–07–16
  7. By: Monica Martinez-Bravo (CEMFI); Carlos Sanz (Banco de España)
    Abstract: Using two novel online surveys collected in May and November 2020, we study the consequences of the first stages of the COVID-19 pandemic on Spanish households. We document a large and negative effect on household income. By May 2020 the average individual lived in a household that had lost 16% of their pre-pandemic monthly income. Furthermore, this drop was highly unequal: while households in the richest quintile lost 6.8% of their income, those in the poorest quintile lost 27%. We also document that the pandemic deepened the gender-income gap: on average, women experienced a three-percentage-point larger income loss than men. While this is consistent with previous findings in the literature, in this paper we document that this effect is driven by women from middle-income households with kids. Finally, we provide evidence that Spanish individuals experienced moderate declines in their levels of psychological well-being. This effect is not different for individuals living in rich or poor households, but the reasons behind well-being losses do differ: richer individuals are more concerned about loss of contact with dear ones, while low-income individuals are more likely to mention loss of income and employment as a key source of emotional distress.
    Keywords: inequality, COVID-19, well-being
    JEL: D31 I14 J31
    Date: 2022–01

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