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The Impact of Economic Crisis on Happiness

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  • Dora Gudmundsdottir

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Abstract

There is a common belief that economic crisis will lead to a decrease in subjective wellbeing. Previous studies indicate that income is correlated with happiness and unemployment with unhappiness. The relationship between increased income and happiness is well documented while the impact of decreased income has been less explored. The aim of this paper is to study how the economic downfall in Iceland, followed by reduced income and increased unemployment, affects happiness as well as to explore which groups are most vulnerable to changes in happiness and which are most resilient. The study is a longitudinal, nationally representative postal survey which assessed 5,918 individual’s aged 18–79. A total of 4,092 (77.3%) answered again in 2009. The relationship between economic factors and happiness was explored using multiple linear regression to find out how much they explain of the happiness variance and the changes in happiness, together with demographic factors, health and social relationships. Results indicate that income and unemployment did not predict happiness but financial difficulties did. A decrease in happiness was detected after the collapse. The change in happiness from 2007 to 2009 was normally distributed, 40% had the same score in both years and an equal number increased as decreased. The explored factors did not explain the changes in happiness. The economic crisis had a limited affect on happiness. Those with financial difficulties were hardest hit. Changes in happiness need to be studied further since they are not well explained by the factors which influence cross-sectional levels of happiness. Copyright Springer Science+Business Media B.V. 2013

Suggested Citation

  • Dora Gudmundsdottir, 2013. "The Impact of Economic Crisis on Happiness," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 110(3), pages 1083-1101, February.
  • Handle: RePEc:spr:soinre:v:110:y:2013:i:3:p:1083-1101
    DOI: 10.1007/s11205-011-9973-8
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    References listed on IDEAS

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    Cited by:

    1. Patrick Sachweh, 2018. "Conditional Solidarity: Social Class, Experiences of the Economic Crisis, and Welfare Attitudes in Europe," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 139(1), pages 47-76, August.
    2. Lukasz Kaczmarek & Aleksandra Bujacz & Michael Eid, 2015. "Comparative Latent State–Trait Analysis of Satisfaction with Life Measures: The Steen Happiness Index and the Satisfaction with Life Scale," Journal of Happiness Studies, Springer, vol. 16(2), pages 443-453, April.
    3. John F. Helliwell & Lara B. Aknin & Hugh Shiplett & Haifang Huang & Shun Wang, 2017. "Social Capital and Prosocial Behaviour as Sources of Well-Being," NBER Working Papers 23761, National Bureau of Economic Research, Inc.
    4. Drakopoulos, Stavros A. & Grimani, Katerina, 2013. "Maslow’s Needs Hierarchy and the Effect of Income on Happiness Levels," MPRA Paper 50987, University Library of Munich, Germany.
    5. Antonakakis, Nikolaos & Collins, Alan, 2014. "Does Fiscal Consolidation Really Get You Down? Evidence from Suicide Mortality," Department of Economics Working Paper Series 182, WU Vienna University of Economics and Business.
    6. Michiel Slag & Martijn J. Burger & Ruut Veenhoven, 2019. "Did the Easterlin Paradox apply in South Korea between 1980 and 2015? A case study," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 66(4), pages 325-351, December.
    7. Yekaterina Chzhen, 2016. "Perceptions of the Economic Crisis in Europe: Do Adults in Households with Children Feel a Greater Impact?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(1), pages 341-360, May.
    8. E. Arampatzi & M. J. Burger & R. Veenhoven, 2015. "Financial distress and happiness of employees in times of economic crisis," Applied Economics Letters, Taylor & Francis Journals, vol. 22(3), pages 173-179, February.
    9. Shang Ha & Seung-Jin Jang, 2015. "National Identity, National Pride, and Happiness: The Case of South Korea," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 121(2), pages 471-482, April.
    10. Dora G. Gudmundsdóttir & Bryndís Björk Ásgeirsdóttir & Felicia A. Huppert & Inga D. Sigfúsdóttir & Unnur A. Valdimarsdóttir & Arna Hauksdóttir, 2016. "How Does the Economic Crisis Influence Adolescents’ Happiness? Population-Based Surveys in Iceland in 2000–2010," Journal of Happiness Studies, Springer, vol. 17(3), pages 1219-1234, June.
    11. Patrick Pilipiec & Wim Groot & Milena Pavlova, 2020. "A Longitudinal Analysis of Job Satisfaction During a Recession in the Netherlands," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 149(1), pages 239-269, May.
    12. M. Azhar Hussain, 2015. "Predicting Well-Being in Europe? The Effect of the Financial Crisis," Eastern European Business and Economics Journal, Eastern European Business and Economics Studies Centre, vol. 1(2), pages 2-31.
    13. Efstratia Arampatzi & Martijn Burger & Spyridon Stavropoulos & Louis Tay, 2020. "The Role of Positive Expectations for Resilience to Adverse Events: Subjective Well-Being Before, During and After the Greek Bailout Referendum," Journal of Happiness Studies, Springer, vol. 21(3), pages 965-995, March.
    14. Tim Reeskens & Leen Vandecasteele, 2017. "Economic Hardship and Well-Being: Examining the Relative Role of Individual Resources and Welfare State Effort in Resilience Against Economic Hardship," Journal of Happiness Studies, Springer, vol. 18(1), pages 41-62, February.
    15. Jorge Guardiola & Monica Guillen-Royo, 2015. "Income, Unemployment, Higher Education and Wellbeing in Times of Economic Crisis: Evidence from Granada (Spain)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 120(2), pages 395-409, January.
    16. Gregor Gonza & Anže Burger, 2017. "Subjective Well-Being During the 2008 Economic Crisis: Identification of Mediating and Moderating Factors," Journal of Happiness Studies, Springer, vol. 18(6), pages 1763-1797, December.

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