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The Macroeconomics of Happiness

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  • Di Tella, R.
  • MacCulloch, R.J.: Oswald, A.J.

Abstract

A large literature in macroeconomics assumes a social objective function, W(pi,U), where inflation, pi, and unemployment, U, are bads. This paper provides some of the first formal evidence for such an approach. It issues data on the reported well-being levels of approximately one quarter of a million sampled Europeans and Americans from the 1970's to the 1990's. After controlling for personal characteristics, year dummies and countries fixed effects, we find that the data trace out a W(pi,U) function. It is approximately a linearly additive "misery index". The paper calculates the implied dollar value of a low inflation rate. It also examines the struture of happiness equations across countries and time.

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Bibliographic Info

Paper provided by Centre for Economic Performance & Institute of Economics in its series Papers with number 19.

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Length: 38 pages
Date of creation: 1997
Date of revision:
Handle: RePEc:fth:cepies:19

Contact details of provider:
Postal: United Kingdom; Centre for Economic Performance & Institute of Economics and Statistics, Oxford University. Manor Road. Oxford OX1 3Ul
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Web page: http://www.economics.ox.ac.uk/
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Keywords: UNEMPLOYMENT ; INFLATION;

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References

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  1. Bruno S. Frey & Alois Stutzer, 2000. "Happiness, Economy and Institutions," CESifo Working Paper Series 246, CESifo Group Munich.
  2. Blanchflower, David G. & Oswald, Andrew J., 2001. "Well-Being Over Time in Britain and the USA," The Warwick Economics Research Paper Series (TWERPS) 616, University of Warwick, Department of Economics.
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  9. DiTella, Rafael & MacCulloch, Robert, 1999. "Partisan social happiness," ZEI Working Papers B 22-1999, ZEI - Center for European Integration Studies, University of Bonn.
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  17. Fischer, Stanley, 1981. "Towards an understanding of the costs of inflation: II," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 15(1), pages 5-41, January.
  18. DiTella, Rafael & MacCulloch, Robert, 2001. "The determination of unemployment benefits," ZEI Working Papers B 04-2001, ZEI - Center for European Integration Studies, University of Bonn.
  19. Morawetz, David, 1977. "Income Distribution and Self-Rated Happiness: Some Empirical Evidence," Economic Journal, Royal Economic Society, vol. 87(347), pages 511-22, September.
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  24. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
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