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on Economics of Happiness |
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Issue of 2025–07–28
three papers chosen by Viviana Di Giovinazzo, Università degli Studi di Milano-Bicocca |
| By: | Canova, Luciano; Paladino, Giovanna |
| Abstract: | This paper investigates the emotional impact of exogenous political shocks on individual well-being by examining how Italian citizens’ optimism and happiness responded to the unexpected outcome of the 2024 U.S. presidential election. Leveraging a unique two-wave panel dataset collected before and after the election, we implement a difference-in-differences design to estimate the causal effect of electoral surprise. Respondents who had confidently predicted a Kamala Harris victory and were subsequently surprised by Donald Trump’s re-election exhibited a significant decline in self-reported happiness, controlling for individual characteristics. We interpret this as evidence of the emotional cost of unexpected geopolitical outcomes, even when such events occur abroad. Our findings underscore the conceptual distinction between optimism (a forward-looking cognitive disposition) and happiness (an affective state), showing that optimism may amplify both the emotional gains from positive outcomes and the emotional costs of negative surprises. The analysis contributes to the literature on subjective well-being by highlighting the role of global events in shaping personal affective responses and by emphasizing the need to account for exogenous shocks in models of life satisfaction. Finally, we discuss implications for future research on the causal relationship between optimism and happiness and suggest methodological strategies for disentangling endogeneity between the two constructs. |
| Keywords: | exogenous emotional shocks, optimism, subjective wellbeing |
| JEL: | C21 D91 I31 |
| Date: | 2025–06–25 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125123 |
| By: | Sandra Bohmann; Susann Fiedler; Maximilian Kasy; Jürgen Schupp; Frederik Schwerter |
| Abstract: | Mental health and wellbeing are unequally distributed in high-income countries, disadvantaging low-income individuals. Unconditional, regular, and guaranteed cash transfers may help address this inequality by promoting financial security and agency. We conducted a preregistered RCT in Germany, where treated participants received monthly payments of EUR 1, 200 for three years. Cash transfers improve mental health and wellbeing. These effects are substantively large and robust. Cash transfers also improve perceived autonomy, savings, prosocial giving, time with friends, and sleep. Our findings suggest that cash transfers improve mental health and wellbeing if they empower agency and meaningful life changes. |
| Keywords: | Basic Income, mental health, RCT, purpose in life, life satisfaction |
| JEL: | C93 I31 D10 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2129 |
| By: | Nursena Aksünger (Vrije Universiteit Amsterdam); Wendy Janssens (Vrije Universiteit Amsterdam and Tinbergen Institute); Menno Pradhan (Vrije Universiteit Amsterdam and Tinbergen Institute) |
| Abstract: | A bi-directional relationship between poverty and mental health may create a vicious cycle, wherein economic hardship and psychological distress reinforce each other. We examine the short-term dynamics between income fluctuations and mental well-being using 17 months of weekly financial diaries and monthly depression assessments from 669 adults in rural Kenya. Dynamic GMM estimations show that higher weekly incomes correlate with lower depression scores, particularly by improving cognition-related sleep quality and concentration. However, depressive symptoms do not predict subsequent income, challenging the notion of a short-term psychological poverty trap. Additionally, household-level mortality and illness shocks correlate with depression but not income, while job loss predicts immediate income reductions but not depression. COVID-19 containment measures explain both outcomes, slightly weakening the income-depression association. Our findings highlight the potential mental health returns to expanding financial support and safety nets, even if breaking a poverty trap via psychological mechanisms seems unlikely short-term. |
| Date: | 2025–02–05 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20250005 |