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Life is Getting Worse in ESS Data: Is This Due to Micro or Macro Factors?

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  • Nadir Preziosi

    ()
    (European Economic Studies Department, College of Europe)

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    Abstract

    In order to evaluate the success of a society, measuring well-being might be a fruitful avenue. For a long time, governments have trusted economic measures, Gross Domestic Product (GDP) in particular, to assess their success. However GDP is only a limited measure of economic success, which is not enough to show whether policies implemented by governments have a positive perceived impact on the people they represent. This paper belongs to the studies of the relationship between measures of well-being and economic factors. More precisely, it tries to evaluate the decrease in happiness and life satisfaction that can be observed in European countries in the 2000-2010 decade. It asks whether this deterioration is mainly due to microeconomic factors, such as income and individual characteristics, or rather to environmental (macroeconomics) factors such as unemployment, inflation or income inequality. Such aggregate factors could impact individual happiness per se because they are related to the perception of an aggregate risk of unemployment or income fall. In order to strengthen this interpretation, this paper checks whether the type of social protection regime existing in different countries mediates the impact of macroeconomic volatility on individual well-being. To go further, adopting the classification of welfare regimes proposed by Esping-Andersen (1990), it verifies whether the decreasing pattern of subjective well-being varies across these regimes. This is partly due to the aggregate social protection expenditure. Hence, this paper brings some additional evidence to the idea that macroeconomic uncertainty has a cost in terms of well-being. More protective social regimes are able to reduce this cost. It also proposes an evaluation of the welfare cost of unemployment and inflation (in terms of happiness and life satisfaction), in each of the different social protection regimes. Finally different measures of well-being, i.e. cognitive, hedonic and eudaimonic, are used to confirm the above mentioned result.

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    File URL: https://www.coleurope.eu/system/files_force/research-paper/beer28_0.pdf?download=1
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    Bibliographic Info

    Paper provided by European Economic Studies Department, College of Europe in its series Bruges European Economic Research Papers with number 28.

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    Length: 58 pages
    Date of creation: Nov 2013
    Date of revision:
    Handle: RePEc:coe:wpbeer:28

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    Related research

    Keywords: happiness; well-being; macroeconomics; social protection; welfare capitalism;

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    References

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    1. Richard Layard & Guy Mayraz & Stephen Nickell, 2009. "Does Relative Income Matter?: Are the Critics Right?," SOEPpapers on Multidisciplinary Panel Data Research 210, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. Luis Diaz-Serrano & Andrés Rodríguez-Pose, 2011. "Decentralization, happiness and the perception of institutions," Working Papers 2011-07, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
    3. Di Tella, Rafael & Alesina, Alberto & MacCulloch, Robert, 2004. "Inequality and Happiness: Are Europeans and Americans Different?," Scholarly Articles 4553007, Harvard University Department of Economics.
    4. Betsey Stevenson & Justin Wolfers, 2008. "Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox," CESifo Working Paper Series 2394, CESifo Group Munich.
    5. Caporale, Guglielmo Maria & Georgellis, Yannis & Tsitsianis, Nicholas & Yin, Ya Ping, 2009. "Income and happiness across Europe: Do reference values matter?," Journal of Economic Psychology, Elsevier, vol. 30(1), pages 42-51, February.
    6. Claudia Biancotti & Giovanni D'Alessio, 2007. "Inequality and Happiness," Working Papers 75, ECINEQ, Society for the Study of Economic Inequality.
    7. Lelkes, Orsolya, 2008. "Happiness over the life cycle: exploring age-specific preferences," MPRA Paper 7302, University Library of Munich, Germany.
    8. Lena Malesevic Perovic & Sivia Golem, 2010. "Investigating Macroeconomic Determinants of Happiness in Transition Countries," Eastern European Economics, M.E. Sharpe, Inc., vol. 48(4), pages 59-75, January.
    9. Di Tella, Rafael & Haisken-De New, John & MacCulloch, Robert, 2010. "Happiness adaptation to income and to status in an individual panel," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 834-852, December.
    10. Clark, Andrew E. & Senik, Claudia, 2011. "Will GDP Growth Increase Happiness in Developing Countries?," IZA Discussion Papers 5595, Institute for the Study of Labor (IZA).
    11. 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.
    12. Arnstein Aassve & Alice Goisis & Maria Sironi, 2012. "Happiness and Childbearing Across Europe," Social Indicators Research, Springer, vol. 108(1), pages 65-86, August.
    13. Rafael Di Tella & Robert MacCulloch, 2005. "Gross National Happiness as an Answer to the Easterlin Paradox?," Macroeconomics 0504027, EconWPA.
    14. Clark, Andrew E. & Senik, Claudia, 2009. "Who Compares to Whom? The Anatomy of Income Comparisons in Europe," IZA Discussion Papers 4414, Institute for the Study of Labor (IZA).
    15. Felicia A. Hupper & Nic Marks & Andrew E. Clark & Johannes Siegrist & Alois Stutzer & Joar Vittersø & Morten Wahrendorf, 2008. "Measuring well-being across Europe: Description of the ESS Well-being Module and preliminary findings," PSE Working Papers halshs-00586267, HAL.
    16. 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.
    17. David G. Blanchflower, 2007. "Is Unemployment More Costly Than Inflation?," NBER Working Papers 13505, National Bureau of Economic Research, Inc.
    18. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
    19. repec:hal:wpaper:halshs-00564985 is not listed on IDEAS
    20. Ed Diener & Ed Sandvik & Larry Seidlitz & Marissa Diener, 1993. "The relationship between income and subjective well-being: Relative or absolute?," Social Indicators Research, Springer, vol. 28(3), pages 195-223, March.
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