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The financial crisis and the well-being of Americans

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  • Angus Deaton

Abstract

I use daily data on self-reported well-being (SWB) to examine how the Great Recession affected the emotional and evaluative lives of the population. In the fall of 2008 and lasting into the spring of 2009, at the bottom of the stock market, Americans reported sharp declines in their life evaluation, sharp increases in worry and stress, and declines in positive affect. By the end of 2010, in spite of continuing high unemployment, these measures had largely recovered. The SWB measures do a better job of monitoring short-run levels of anxiety than the medium-term evolution of the economy. Even very large macroeconomic shocks will cause small and hard to detect effects on SWB. Life evaluation questions are extremely sensitive to question order effects--asking political questions first reduces reported life evaluation by an amount that dwarfs the effects of even the worst of the crisis. Copyright 2012 Oxford University Press 2011 All rights reserved, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 64 (2012)
Issue (Month): 1 (January)
Pages: 1-26

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Handle: RePEc:oup:oxecpp:v:64:y:2012:i:1:p:1-26

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  8. Christelis, Dimitris & Georgarakos, Dimitris & Jappelli, Tullio, 2011. "Wealth shocks, unemployment shocks and consumption in the wake of the Great Recession," CFS Working Paper Series, Center for Financial Studies (CFS) 2011/27, Center for Financial Studies (CFS).
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  11. Robert Metcalfe & Nattavudh Powdthavee & Paul Dolan, 2011. "Destruction and Distress: Using a Quasi‐Experiment to Show the Effects of the September 11 Attacks on Mental Well‐Being in the United Kingdom," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 121(550), pages F81-F103, February.
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Cited by:
  1. Andy Sumner & Richard Mallett, 2013. "Capturing Multidimensionality: What does a Human Wellbeing Conceptual Framework Add to the Analysis of Vulnerability?," Social Indicators Research, Springer, Springer, vol. 113(2), pages 671-690, September.
  2. Goebel, Jan & Krekel, Christian & Tiefenbach, Tim & Ziebarth, Nicolas R., 2013. "Natural Disaster, Policy Action, and Mental Well-Being: The Case of Fukushima," IZA Discussion Papers 7691, Institute for the Study of Labor (IZA).
  3. Manuela Angelucci & Dean Karlan & Jonathan Zinman, 2014. "Microcredit Impacts: Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco," NBER Working Papers 19827, National Bureau of Economic Research, Inc.
  4. Grosjean, Pauline & Ricka, Frantisek & Senik, Claudia, 2013. "Learning, political attitudes and crises: Lessons from transition countries," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 490-505.
  5. McInerney, Melissa & Mellor, Jennifer M. & Nicholas, Lauren Hersch, 2013. "Recession depression: Mental health effects of the 2008 stock market crash," Journal of Health Economics, Elsevier, Elsevier, vol. 32(6), pages 1090-1104.
  6. Headey, Derek D. & Ecker, Olivier, 2012. "Improving the measurement of food security:," IFPRI discussion papers, International Food Policy Research Institute (IFPRI) 1225, International Food Policy Research Institute (IFPRI).
  7. Christopher Christodoulou & Stefan Schneider & Arthur Stone, 2014. "Validation of a Brief Yesterday Measure of Hedonic Well-Being and Daily Activities: Comparison with the Day Reconstruction Method," Social Indicators Research, Springer, Springer, vol. 115(3), pages 907-917, February.
  8. Derek D. Headey, 2013. "The Impact of the Global Food Crisis on Self-Assessed Food Security," World Bank Economic Review, World Bank Group, World Bank Group, vol. 27(1), pages 1-27.
  9. Ed Diener & Ronald Inglehart & Louis Tay, 2013. "Theory and Validity of Life Satisfaction Scales," Social Indicators Research, Springer, Springer, vol. 112(3), pages 497-527, July.
  10. Carlson, Kyle, 2014. "Fear itself: The effects of distressing economic news on birth outcomes," MPRA Paper 56560, University Library of Munich, Germany.
  11. Marcus Klemm, 2011. "You Don't Know What You've Got till It's Gone!: Unemployment and Intertemporal Changes in Self-Reported Life Satisfaction," SOEPpapers on Multidisciplinary Panel Data Research, DIW Berlin, The German Socio-Economic Panel (SOEP) 421, DIW Berlin, The German Socio-Economic Panel (SOEP).
  12. Christelis, Dimitris & Georgarakos, Dimitris & Jappelli, Tullio, 2011. "Wealth shocks, unemployment shocks and consumption in the wake of the Great Recession," CFS Working Paper Series, Center for Financial Studies (CFS) 2011/27, Center for Financial Studies (CFS).
  13. Cojocaru, Alexandru & Diagne, Mame Fatou, 2013. "How reliable and consistent are subjective measures of welfare in Europe and Central Asia ? evidence from the second life in transition survey," Policy Research Working Paper Series, The World Bank 6359, The World Bank.
  14. Marta Lachowska, 2013. "Expenditure, Confidence, and Uncertainty: Identifying Shocks to Consumer Confidence Using Daily Data," Upjohn Working Papers and Journal Articles, W.E. Upjohn Institute for Employment Research 13-197, W.E. Upjohn Institute for Employment Research.

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