nep-ltv New Economics Papers
on Unemployment, Inequality and Poverty
Issue of 2010‒01‒10
seven papers chosen by
Maximo Rossi
University of the Republic

  1. The Impact of Institutions and Development on Happiness By Duha T. Altindag; Junyue Xu
  2. You can’t be happier than your wife. Happiness Gaps and Divorce By Cahit Guven; Claudia Senik; Holger Stichnoth
  3. New Evidence on the Role of Remittances on Health Care Expenditures by Mexican Households By Amuedo-Dorantes, Catalina; Pozo, Susan
  4. Design of stated preference surveys: Is there more to learn from behavioral economics? By Carlsson, Fredrik
  5. Spaghetti Unravelled: A Model-Based Description of Differences in Income-Age Trajectories By Jenkins S
  6. Entropy-based segregation indices By Ricardo Mora; Javier Ruiz-Castillo
  7. Income and Beyond: Multidimensional Poverty in six Latin American countries By Diego Battiston; Guillermo Cruces; Luis Felipe Lopez Calva; Maria Ana Lugo; Maria Emma Santos

  1. By: Duha T. Altindag; Junyue Xu
    Abstract: This paper demonstrates that institutional factors influence the subjective well-being of individuals differently in rich versus poor countries. A lower level of corruption, a more democratic government and better civil rights increase the well-being of individuals in rich countries, whereas an increase in per capita income has no impact. On the contrary, in poor countries the extent of corruption, democracy and civil rights have no influence on happiness, but an increase in per capita income impacts happiness positively. This stark contrast may be due to the difference of preferences over income and institutional factors.
  2. By: Cahit Guven; Claudia Senik; Holger Stichnoth
    Abstract: This paper asks whether the gap in subjective happiness between spouses matters per se, i.e. whether it predicts divorce. We use three panel databases to explore this question. Controlling for the level of life satisfaction of spouses, we find that a higher satisfaction gap, even in the first year of marriage, increases the likelihood of a future separation. We interpret this as the effect of comparisons of well-being between spouses, i.e. aversion to unequal sharing of wellbeing inside couples. To our knowledge, this effect has never been taken into account by existing economic models of the household. The relation between happiness gaps and divorce may be due to the fact that couples which are unable to transfer utility are more at risk than others. It may also be the case that assortative mating in terms of happiness baseline-level reduces the risk of separation. However, we show that assortative mating is not the end of the story. First, our results hold in fixed-effects estimates that take away the effect of the initial quality of the match between spouses: fixed-effects estimates suggest that a widening of the happiness gap over time raises the risk of separation. Second, we uncover an asymmetry in the effect of happiness gaps: couples are more likely to break-up when the difference in life satisfaction is unfavourable to the wife. The information available in the Australian survey reveals that divorces are indeed predominantly initiated by women, and importantly, by women who are unhappier than their husband. Hence, happiness gaps seem to matter to spouses, not only because they reflect a mismatch in terms of baseline happiness, but because they matter as such.
    Keywords: divorce, happiness, comparisons, panel, households, marriage
    JEL: J12 D13 D63 D64 H31 I31 Z13
    Date: 2009–12–08
  3. By: Amuedo-Dorantes, Catalina (San Diego State University, California); Pozo, Susan (Western Michigan University)
    Abstract: Using Mexico's 2002 wave of the Encuesta Nacional de Ingresos y Gastos de los Hogares (ENIGH), we find that international remittances raise health care expenditures. Approximately 6 pesos of every 100 peso increment in remittance income are spent on health. The sensitivity of health care expenditures to variations in the level of international remittances is almost three times greater than its responsiveness to changes in other sources of household income. Furthermore, health care expenditures are less responsive to remittance income among lower-income households. Since the lower responsiveness may be partially due to participation of lower-income households in public programs like PROGRESA (now called Oportunidades), we also analyze the impact of remittances by health care coverage. As expected, we find that households with some kind of health care coverage – either through their jobs or via participation in PROGRESA – spend less of remittance income increments on health care than households lacking any health care coverage. Hence, remittances may help equalize health care expenditures across households with and without health care coverage.
    Keywords: remittances, health care, household expenditures, Mexico
    JEL: F24 I1
    Date: 2009–12
  4. By: Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We discuss the design of stated preference (SP) surveys in light of findings in behavioral economics such as context dependence of preferences, learning, and differences between revealed and normative preferences. More specifically, we discuss four different areas: (i) revealed and normative preferences, (ii) learning and constructed preferences, (iii) context dependence, and (iv) hypothetical bias. We argue that SP methods would benefit from adapting to some of the findings in behavioral economics, but also that behavioral economics may gain insights from studying SP methods.<p>
    Keywords: stated preferences; behavioral economics
    JEL: C91 H40 Q51
    Date: 2009–12–09
  5. By: Jenkins S (Institute for Social and Economic Research)
    Abstract: A modelling framework is developed for describing income-age trajectories that is useful for summarizing not only the average profile for a group of individuals with similar characteristics, but also how individual trajectories differ from the group average. Using data from waves 1-17 of the British Household Panel Survey, the model is estimated separately for twelve groups of individuals differentiated in terms of educational qualifications, birth cohort and sex. The results indicate significant differences in the shapes of average trajectories across groups, and substantial variations in trajectories across individuals within groups.
    Date: 2009–12–09
  6. By: Ricardo Mora; Javier Ruiz-Castillo
    Abstract: Recent research (Reardon and Firebaugh, 2002, Frankel and Volij, 2009, and Mora and Ruiz- Castillo, 2009a) has shown that two entropy-based segregation indices possess an appealing mixture of basic and subsidiary but useful properties. It would appear that the only fundamental difference between the mutual information, or M index, and the Entropy, Information or H index, is that the second is a normalized version of the first. This paper introduces another normalized index in that family, the H* index that, contrary to what is often asserted in the literature, is the normalized entropy index that captures the notion of segregation as departures from evenness. More importantly, this paper shows that applied researchers do better using the M index than using either H or H* in two circumstances: (i) if they are interested in the decomposability of segregation measures for any partition of organizational units into larger clusters and of demographic groups into supergroups, and (ii) if they are interested in the invariance properties of segregation measures to changes in the marginal distributions by demographic groups and by organizational units.
    Keywords: Multigroup segregation measurement, Axiomatic properties, Entropy based indicators, Econometric models
    Date: 2009–11
  7. By: Diego Battiston (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - Universidad Nacional de La Plata); Guillermo Cruces (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - Universidad Nacional de La Plata y CONICET); Luis Felipe Lopez Calva (United Nations Development Programme, Regional Bureau for Latin America and the Caribbean); Maria Ana Lugo (Department of Economics, University of Oxford); Maria Emma Santos (Oxford Poverty and Human Development Initiative (OPHI), Oxford University and CONICET - Universidad Nacional del Sur, Argentina.)
    Abstract: This paper presents empirical results of a wide range of multidimensional poverty measures for: Argentina, Brazil, Chile, El Salvador, Mexico and Uruguay, for the period 1992–2006. Six dimensions are analysed: income, child attendance at school, education of the household head, sanitation, water and shelter. Over the study period, El Salvador, Brazil, Mexico and Chile experienced significant reductions of multidimensional poverty. In contrast, in urban Uruguay there was a small reduction in multidimensional poverty, while in urban Argentina the estimates did not change significantly. El Salvador, Brazil and Mexico together with rural areas of Chile display significantly higher and more simultaneous deprivations than urban areas of Argentina, Chile and Uruguay. In all countries, access to proper sanitation and education of the household head are the highest contributors to overall multidimensional poverty.
    Keywords: Multidimensional poverty measurement, counting approach, Latin America, Unsatisfied Basic Needs, rural and urban areas.
    JEL: D31 I32
    Date: 2009–11

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