Measuring Socio-economic Factors and Sensitivity of Happiness

There is significant variation in average subjective well-being across countries. What makes people in some countries happier or more miserable than others? In this study, we decompose the difference in average subjective well-being across countries into a comprehensive set of socio-economic factors along with cross-country difference in sensitivity of happiness in order to answer the question. While an individual’s subjective well-being is affected by socio-economic status, every individual does not necessarily draw the same level of subjective well-being from a given condition of life because of different personal characteristics. Sensitivity of happiness is an umbrella term capturing such factors that are not reflected by socio-economic conditions. We introduce Data Envelopment Analysis (DEA) approach to estimate a happiness function and specify the sensitivity score for each country in a sample. We draw on a comprehensive set of well-being indicators released by the Better Life Initiative of the OECD, along with measures of income inequality. We find that the health factor and sensitivity term play the largest role in generating variation in subjective well-being. Even within countries, the average level of subjective well-being varies between different population groups. Drawing on a set of indicators that assess the life circumstances of different groups within each country, our decomposition formulation allows for a full explanation of the differences in average life satisfaction between the groups. We investigate the differences between men and women, and high income earners and low income earners.     

Happiness,Comparison Effects,and Expectations in Turkey

It is crucial to know the factors that influence happiness. This study investigates the determinants of happiness with an emphasis on comparison effects (income relative to others’ income or relative to the own income in the past) and expectations about own future income. Nationally representative cross-sectional data collected by a Turkish survey on happiness of individuals 18 or older in years 2003–2011 are used to conduct regression analyses. The dataset includes around 6,000–7,000 individuals in each year. The findings of the study indicate that favorable income comparisons and expectations of future household income are correlated with a higher level of happiness, consistent with a model in which both comparisons and income expectations are seen as a consumption good. Secondly, comparisons and expectations bear on happiness asymmetrically. Third, the estimated effect of expecting higher income is smaller in Turkey than the estimates reported in the literature. Fourth, the magnitudes of the effects of comparisons and expectations depend on the business cycle. In crisis years, compared to years of economic expansion, the importance for happiness of having high absolute income is greater and the importance of having high relative income or high income expectations is lower. Finally, Turkish people have greater concern for their relative position in the society than for having higher absolute income in the future. Several robustness checks lend support to the validity of the aforementioned results.     

What wealth-happiness paradox? A short note on the American case

Happiness scholars have tried to resolve the seeming paradox that as Americans’ wealth increased substantially over the last few decades, their happiness did not. This article questions whether the paradox is real. Demonstrations of the paradox almost always rely on GDP per capita as the measure of wealth, but that is a poor measure of a people’s well-being. It is heavily and increasingly skewed; it does not account for effort. Using instead measures of household income, male income, and average wages eliminates the paradox; these indicators of affluence have grown only slowly or declined in the same period, paralleling the changes in happiness scores. Moreover, using these indicators reveals a modest but real correlation between material well-being and national happiness.     

Cross-National Pattern of Happiness: Do Higher Education and Less Urbanization Degrade Happiness?

Traditionally, happiness has been recognized as the result of a positive relationship with one's income level. However, income level may not be the only factor that affects one’s happiness. In this paper, the effects of education and urbanization factors among 67 countries were analyzed by using World Value Survey data and World Bank Indicator. Generally, the urbanization positively affects happiness in the cross-country analysis, but happiness has a negative correlation with education level. More specifically, four geographical trends have been found in this paper. First, if two variables have very low values, the nation's happiness will drop. Second, according to the moderated education ratio (10 < E < 35), East Asia (non-OECD) is found to be happier than Middle East/North Africa. Third, according to the high education ratio (E > 50), East Asia (OECD) has a lower level of happiness than other countries. Lastly, in Europe, urbanization and education are not significant factors in terms of happiness, but the economic level is the most important factor. Those results provide evidence that there are different effects of education/urbanization on happiness in terms of 1) general implication and 2) sub-divided regions (geographic or norm difference).     

The Effects of Income Levels and Income Inequalities on Happiness

The standard of living reflected by one’s income and consumption is the primary explanation for the utility or satisfaction of the private consumer. However, empirical evidence very often demonstrates that the level of happiness is not necessarily higher for wealthy people in comparison to the poor. This holds within specific populations of a country, and in macro terms by comparison between the happiness of populations with low and high GDP_ppp per capita. Different research studies have used other economic and social explanatory variables for determining consumer happiness within countries. The present paper adds the new factor of income inequality that affects happiness. It is empirically proved that at extreme values of inequality measured by the Gini index, the effect of happiness is negative regardless of GDP_ppp per capita. However, at the intermediate ranges of the Gini index the effect of changes in the index on happiness is ambiguous. These results are found regardless of the actual values of GDP_ppp per capita.     

Unemployment Needs Context: How Societal Differences between Countries Moderate the Loss in Life-Satisfaction for the Unemployed

The notion of voluntary unemployment held by orthodox economic theory could be refuted by happiness research, showing that those unemployed experience a persistent loss in life-satisfaction. However, most current research addressing this question is conducted at the individual level or takes into account only simple economic aggregate indicators, such as unemployment rates or inflation. The effects of unemployment on life-satisfaction however are likely to vary between societies depending on factors beyond the economic realm. This paper demonstrates the need to consider a wider set of country-level characteristics, including economic, demographic and attitudinal indicators, if the relationship between unemployment and life-satisfaction is to be understood adequately. Using data from the World Values Survey multi-level models are computed for up to 40 European and Anglo-Saxon societies. While economic indicators such as GDP per capita and income inequality appear to be relevant, unemployment rates seem to not affect the relationship greatly, contrary to results from several previous studies. Other factors however do, either mitigating the loss in life-satisfaction when becoming unemployed (such as the mean level of the perception of autonomy in a society), or further depressing life-satisfaction (such as the mean emphasis of work in a society, the age-dependency ratio or the proportion of women in the labour force). Possible explanations are discussed and suggestions for improved further research made.     

Multidimensional Poverty Index and Happiness

In recent years, income concepts have been criticized for being too narrow to capture human well-being. The broader “objective” capability approach and subjective well-being analyses have been highlighted as most prominent approaches which allow for well-being assessments beyond income. Recently, a combination of the capability and of the subjective well-being approach has been recommended to strengthen well-being analyses. Our paper further explores the relations of both approaches. Based upon micro data covering more than 2300 individuals from four villages in rural Karnataka (India), the paper empirically analyses to which degree objective capability deprivation reflected by the United Nations Development Programme’s Multidimensional Poverty Index coincides with reduced happiness. We find positive correlations between Multidimensional Poverty Index deprivation and lack of happiness for some dimensions; otherwise the correlation is weak for the majority of Multidimensional Poverty Index indicators. Our results suggest that “relativity” towards other villagers is crucial for happiness. Moreover, from a happiness perspective our findings show the necessity to integrate financial deprivation indicators and further “missing dimensions” of deprivation into the Multidimensional Poverty Index. Furthermore, it may be fruitful to measure multidimensional poverty on a household and individual level.     

The Relationship Between Happiness and Consumption Expenditure: Evidence from Rural China

We use data from the 2016 China Labor-force Dynamics Survey (CLDS) to examine the relationship between happiness and consumption expenditure of rural farmers in China. A two-stage residual inclusion approach is applied to tackle the potential endogeneity issue of happiness. The empirical results show that a higher level of happiness is associated with an increase in consumption expenditure in general. Further analysis reveals that higher levels of happiness are positively and significantly associated with higher expenditures on basic living goods, education and gifts. We also find that both household income and access to the Internet boost happiness and increase consumption expenditure. Happiness plays a larger role in improving the consumption expenditure of rural households compared with their urban counterparts. Our findings may suggest that improving rural income via income diversification strategies and investing in rural information and communication technology infrastructures would encourage rural farmers’ happiness, promote the upgrading of rural consumption and boost sustainable economic growth.

     

Does More Money Make You Happier? Why so much Debate?

Easterlin’s famous paradox questioned standard economic assumptions about a fundamental relationship in economics: that between happiness and income. In recent years there has been renewed debate about the paradox. In this essay, I highlight some of the methodological issues and challenges underlying that debate. I focus on the sensitivity of the results to the method selected, the choice of micro or macro data, and the way that happiness questions are defined and framed, all of which result in divergent conclusions. I also note the mediating role of the pace and nature of economic growth, institutional frameworks, and inequality. What is most notable is the remarkable consistency in the determinants of individual happiness – including income – within countries of diverse income levels and, at the same time, how happiness is affected by cross-country differences that are related to average per-capita income levels, such as political freedom and public goods. Income clearly plays a role in determining both individual and country level happiness. Still, assessing its role relative to other more difficult to measure factors as countries develop in new ways and at different rates will remain a challenge for the foreseeable future.     

Materialism and the Family Structure–Stress Relation

In this study, we examined the role that materialism plays in the family structure–stress relation in a sample of adolescents. Materialism is a complex construct that appears to both mediate and moderate the family structure–stress relation as well as have both positive and negative effects. The happiness dimension of materialism in particular appears to both mediate and moderate the family structure–stress relation. Adolescents who associate happiness with material possessions report higher levels of family stress due to family disruption (parental divorce) compared with those who are less likely to associate happiness with material possessions. This finding runs contrary to recent marketing research. Additionally, we found the success dimension of materialism to have a direct and salubrious impact on family stress levels.     

Institutional Origins of Subjective Well-Being: Estimating the Effects of Economic Freedom on National Happiness

We exploit the cross-country differences in economic freedom to examine the link between the quality of institutions and subjective well-being. Using Veenhoven’s happiness dataset, the evidence suggests countries with better economic institutions and higher level of economic freedom, captured by the security of property rights, open markets and more limited government, are significantly more likely to experience greater subjective well-being after controlling for structural confounders of national subjective well-being such as income, unemployment, inequality, social capital and life satisfaction. The effect of institutions on cross-national happiness is both significant and robust to different model specifications, estimation techniques and possible sources of endogeneity. Furthermore, our panel data analysis reveals that over time higher levels of economic freedom are associated with decreasing subjective well-being after controlling for state dependence and income.     

Happiness and Domain Satisfaction in Taiwan

Happiness and life satisfaction are two empirically correlated but nobreak conceptually different measures of well-being. As an emotional state, happiness is sensitive to sudden changes in mood, whilst satisfaction is regarded as a cognitive or judgmental state. Using estimations from two empirical models, the aim of this study is to examine the determinants of happiness and satisfaction amongst nobreak Taiwanese people in a number of life domains. First of all, we attempt to investigate the individual characteristics of happiness by using an ordered probit model. Secondly, using ordinary least squares, we include an individual's value or attitude variables as nobreak determinants of the level of satisfaction with different life domains.Our results suggest that higher income is associated with a higher level of subjective well-being. Measures of comparison income are significantly negatively correlated with the reported level of happiness and job satisfaction, which supports the hypothesis that well-being depends on income relative to a reference group. Consistent with the results from other countries, married people report a higher degree of happiness and satisfaction, whilst the past experience of unemployment significantly reduces subjective well-being. There is little gender difference in happiness or satisfaction with different domains. Furthermore, individual's personal values have strong effects on both marital satisfaction and job satisfaction. The findings of this paper confirm that the effects of personal characteristics are fundamentally different in terms of happiness and satisfaction with specific domains of life.     

Happiness Trends Under Democracy: Where Will the New South African

Five years after South Africa's first democratic elections in 1994, life satisfaction and happiness still reflect societal divides sowed by apartheid social engineering. The paper reports the indicators: life satisfaction, happiness and expectations for the future, from national surveys conducted between 1983 and 1999 for the South African Quality-of-Life Trends Project. Post-election euphoria, which saw all South Africans happy and satisfied with life for a brief moment in 1994, raises the question where the new set-level of subjective well-being will eventually come to rest. In 1999, in spite of some gains in living conditions, the level of life satisfaction of blacks has not risen above the mid-point and happiness is only slightly above the mid-point. Meanwhile, whites, who have forfeited their political dominance, continue to score above the mid-point on happiness and life satisfaction. The paper draws on the literature, particularly on quality-of-life trends in reunified Germany and paradoxical trends in African-American life satisfaction when discussing the dynamics underlying South African subjective well-being. It is argued that coping mechanisms may play an important role in determining levels of subjective well-being in the complex situation of South Africa.     

Developments in the Measurement of Subjective Well-Being and Poverty: An Economic Perspective

Drawing on unique survey data for rural Pakistan, we estimate a happiness model to explore to what extent an economic perspective adds to our understanding of subjective wellbeing poverty. The data elicits information on subjective well-being in general and particularly on financial well-being in terms of household’s happiness with the current income or expenditure. We find that the well-being approach closely depicts the idea of well-being poverty in terms of the level education, health and income which matter significantly. Moreover unlike developed nations this study suggests a positive impact of children on well-being and poverty due to their productive contribution. As studies employing good data from developing countries are rare, this paper can potentially make a good contribution to the existing happiness literature, with special reference to Pakistan. Secondly, it brings new and strong empirical evidence to alternative approaches to subjective well-being poverty.     

中国城镇低龄退休老年人工作与幸福感的关系

为探讨老年人工作与幸福感的关系,并对其机制作出解释,本研究利用中国家庭追踪调查(CFPS)数据,选取具有城镇户籍、60~69周岁的男性和50~69周岁的女性,形成3406人的样本,通过独立样本t检验和回归发现,我国城镇低龄退休老年人工作与幸福感负相关;交互效应分析指出这种关系随着老年人社会地位的提高逐渐弱化;工作对幸福感的中介效应分析结果显示,经济收入、人际交往、积极心态中介效应不显著,闲暇活动中介效应显著。因此,由前三者构成的工作对幸福感的正效应无法抵消因为闲暇损失所造成的负效应。     

Happiness, Markets, and Democracy: Latin America in Comparative Perspective

The literature on subjective well-being highlights the role of relative income differences, an issue which is particularly salient for the emerging market countries. We explore the demographic determinants of happiness in 17 countries in Latin America, as well as the effects of macroeconomic trends and attitudes about the market on happiness. We provide comparative reference with data from Russia and the United States. We find that the determinants of happiness in Latin America are remarkably similar to those in the advanced industrial countries. We also find a marked and negatively skewed perceptions gap between individuals' objective economic situations and their subjective evaluations in both Latin America and Russia. That gap, in turn, has negative effects on happiness. Inflation and unemployment have negative effects on happiness in both contexts, while pro-market attitudes and preference for democracy have positive effects.     

Subjective Well-Being in an Era of Relentless Growth: The Case of Turkey Between 2004 and 2014

This paper analyses the subjective well-being levels in Turkey between 2004 and 2014 by relying on Turkish Statistical Institute’s Life Satisfaction Surveys. This is the first study ever suggesting an alternative well-being approach for Turkish population based on subjective measures. Inspired from the Bhutan’s Gross National Happiness and Cummins et al.’s (2003) Australian Unity Well-Being Index approaches, we constructed several subjective well-being indexes for the first time in Turkey. The main findings of this study are as follows: (1) Despite GDP per capita (in current $) doubles between 2004 and 2014 period, constructed indexes show slight increments or stagnate around some level. (2) We found a slight support for Frey and Stutzer’s (2002a) argument that GDP per capita is insensible after some threshold. (3) National well-being indicators are found to be more volatile than individual well-being indicators, which hints that individuals may be using their informal social networks as a shelter from the economic and politic fluctuations in the country. (4) Much of the volatility in subjective well-being indexes are caused by psychological well-being indicators. Previous results indicate that as basic requirements of a society are met after some level of per capita income, non-materialistic aspirations- like happiness, freedom or justice-started to surpass materialistic aspirations. Same is true for Turkey- this led us to conclude that the reductionist approach of delegating the solution of social and ecological problems to economic growth process may lie beneath this dismal outcome in Turkey in the last decade. Thus, we recommend policy-makers to upkeep with the reform process which would make economic and political system more transparent and competitive, which in turn, help to ameliorate the channels through which individuals fulfil their aspirations.     

Happiness, Income, and Beyond

This commentary to Carol Graham’s paper deals with the nature of the relationship between income and happiness. Carol Graham focuses her contribution on what I call the positive-coefficient hypothesis in economic theory; which states that, on average, well-being rises with income. The hypothesis was first questioned by Richard Easterlin’s pioneering work and it has captured a lot of attention from happiness researchers during the last decade. My contribution deals with a related hypothesis, which I call the close-relationship hypothesis in economic theory. The hypothesis states that a person’s income is a good predictor of his or her well-being. I show that this hypothesis is rejected by happiness research, and I discuss the implications of this rejection.     

收入与幸福的关系及其现实意义

收入与幸福的关系一直饱受争议。文章在分析已有研究成果的基础上,总结出收入与幸福之间的曲线关系:在低收入水平下,收入的增加会导致幸福水平的显著提升,当收入一旦达到能够满足人们基本生活需要的水平之后,它对幸福的积极效应就会被社会比较、适应和欲望等心理因素削弱。基于这种关系,要提高中国人民的幸福感,一方面需要社会的人文关怀与公平调整,特别是制度设计,另一方面需要个人的努力奋斗和心理调节。     

Freedom and Rationality as Predictors of Cross-National Happiness Patterns: The Role of Income as a Mediating Variable

Freedom and rationality have traditionally been viewed as essential ingredients to the 'pursuit of happiness'. Previous research has found that the way in which happiness is linked to freedom and other attributes of individualistic society is affected by the income level. This paper formulates a structural model of the linkage between political freedom, rationality, and happiness which takes explicit account of income as a mediating variable. Since income is hypothesized to be linked to the degree of freedom and rationality prevailing in a society, this approach permits to distinguish between direct and indirect linkages of happiness to freedom and rationality. Estimating the model with cross-national data yields the following key findings: (1) Happiness is positively related to freedom as well as to rationality at high freedom/rationality levels and negatively at low levels. (2) Whereas freedom affects happiness only indirectly (through its impact on income), rationality has both direct and indirect effects on happiness.