nep-hap New Economics Papers
on Economics of Happiness
Issue of 2024‒04‒01
two papers chosen by



  1. Welfare and the Act of Choosing By B. Douglas Bernheim; Kristy Kim; Dmitry Taubinsky
  2. Life Events and Life Satisfaction: Estimating Effects of Multiple Life Events in Combined Models By Michael D. Krämer; Julia M. Rohrer; Richard E. Lucas; David Richter

  1. By: B. Douglas Bernheim; Kristy Kim; Dmitry Taubinsky
    Abstract: The standard revealed-preference approach to welfare economics encounters fundamental difficulties when the act of choosing directly affects welfare through emotions such as guilt, pride, and anxiety. We address this problem by developing an approach that redefines consumption bundles in terms of the sensations they produce, and measures welfare by blending choice-based methods with self-reported well-being techniques. In applications to classic social preferences paradigms, our approach shows that standard revealed-preference methods, including those that exploit choices over menus, mismeasure welfare because preferences depend on choice sets, while self-reported happiness and satisfaction are not sufficient statistics for welfare.
    JEL: D60 D91
    Date: 2024–03
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:32200&r=hap
  2. By: Michael D. Krämer; Julia M. Rohrer; Richard E. Lucas; David Richter
    Abstract: How do life events affect life satisfaction? Previous studies focused on a single event or separate analyses of several events. However, life events are often grouped non-randomly over the lifespan, occur in close succession, and are causally linked, raising the question of how to best analyze them jointly. Here, we used representative German data (SOEP; N = 40, 121 individuals; n = 41, 402 event occurrences) to contrast three fixed-effects model specifications: First, individual event models in which other events were ignored, which are thus prone to undercontrol bias; second, combined event models which controlled for all events, including subsequent ones, which may induce overcontrol bias; and third, our favored combined models that only controlled for preceding events. In this preferred model, the events of new partner, cohabitation, marriage, and childbirth had positive effects on life satisfaction, while separation, unemployment, and death of partner or child had negative effects. Model specification made little difference for employment- and bereavement-related events. However, for events related to romantic relationships and childbearing, small but consistent differences arose between models. Thus, when estimating effects of new partners, separation, cohabitation, marriage, and childbirth, care should be taken to include appropriate controls (and omit inappropriate ones) to minimize bias.
    Keywords: life events, life satisfaction, event co-occurrence, romantic relationships, childbirth
    Date: 2024
    URL: http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp1204&r=hap

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