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Monetary policy and happiness: Preferences over inflation and unemployment in Latin America

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  • Ruprah, Inder J.
  • Luengas, Pavel

Abstract

Using subjective well-being survey data for Latin America, we present evidence that both inflation and unemployment reduce well-being; where the cost of inflation in terms of unemployment, hence the relative size of the weights in a social well-being functions, is about one to eight, almost double of that found for OECD countries. The trade-off, and therefore the misery index, differs across subgroups. For example, the young and left-leaning citizens are more concerned with unemployment than inflation.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics).

Volume (Year): 40 (2011)
Issue (Month): 1 (February)
Pages: 59-66

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Handle: RePEc:eee:soceco:v:40:y:2011:i:1:p:59-66

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Web page: http://www.elsevier.com/locate/inca/620175

Related research

Keywords: Happiness Life Satisfaction Inflation Unemployment Misery index;

References

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  1. Moura, Marcelo L. & de Carvalho, Alexandre, 2010. "What can Taylor rules say about monetary policy in Latin America?," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 392-404, March.
  2. Wolfers, Justin, 2003. "Is Business Cycle Volatility Costly? Evidence from Surveys of Subjective Well-Being," International Finance, Wiley Blackwell, vol. 6(1), pages 1-26, Spring.
  3. DiTella, Rafael & MacCulloch, Robert & Oswald, Andrew J., 2001. "Preferences over inflation and unemployment: Evidence from surveys of happiness," ZEI Working Papers B 03-2001, ZEI - Center for European Integration Studies, University of Bonn.
  4. David G. Blanchflower, 2007. "Is Unemployment More Costly Than Inflation?," NBER Working Papers 13505, National Bureau of Economic Research, Inc.
  5. Woodford Michael, 2002. "Inflation Stabilization and Welfare," The B.E. Journal of Macroeconomics, De Gruyter, vol. 2(1), pages 1-53, February.
  6. Anders Björklund & Richard B. Freeman, 2010. "Searching for Optimal Inequality/Incentives," NBER Chapters, in: Reforming the Welfare State: Recovery and Beyond in Sweden, pages 25-56 National Bureau of Economic Research, Inc.
  7. Böckerman, Petri & Ilmakunnas, Pekka, 2007. "Unemployment and self-assessed health: Evidence from panel data," MPRA Paper 1798, University Library of Munich, Germany.
  8. Andrew Clark, 2001. "Unemployment As A Social Norm: Psychological Evidence from Panel Data," DELTA Working Papers 2001-17, DELTA (Ecole normale supérieure).
  9. Rafael Di Tella & Robert MacCulloch, 2006. "Some Uses of Happiness Data in Economics," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 25-46, Winter.
  10. David G. Blanchflower, 2009. "International Evidence on Well-Being," NBER Chapters, in: Measuring the Subjective Well-Being of Nations: National Accounts of Time Use and Well-Being, pages 155-226 National Bureau of Economic Research, Inc.
  11. Bruno S. Frey, 2008. "Happiness: A Revolution in Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262062771, December.
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