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The Financial Crisis and the Well-Being of America

In: Investigations in the Economics of Aging

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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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Suggested Citation

  • Angus Deaton, 2011. "The Financial Crisis and the Well-Being of America," NBER Chapters,in: Investigations in the Economics of Aging, pages 343-368 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:12447
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    References listed on IDEAS

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    1. Daniel Kahneman & Peter P. Wakker & Rakesh Sarin, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 375-406.
    2. Rajashri Chakrabarti & Donghoon Lee & Wilbert van der Klaauw & Basit Zafar, 2013. "Household Debt and Saving during the 2007 Recession," NBER Chapters,in: Measuring Wealth and Financial Intermediation and Their Links to the Real Economy, pages 273-322 National Bureau of Economic Research, Inc.
    3. Rafael Di Tella & Robert J. MacCulloch & Andrew J. Oswald, 2003. "The Macroeconomics of Happiness," The Review of Economics and Statistics, MIT Press, pages 809-827.
    4. Angus Deaton, 2008. "Income, Health, and Well-Being around the World: Evidence from the Gallup World Poll," Journal of Economic Perspectives, American Economic Association, pages 53-72.
    5. Christelis, Dimitris & Georgarakos, Dimitris & Jappelli, Tullio, 2015. "Wealth shocks, unemployment shocks and consumption in the wake of the Great Recession," Journal of Monetary Economics, Elsevier, pages 21-41.
    6. Robert J. MacCulloch & Rafael Di Tella & Andrew J. Oswald, 2001. "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness," American Economic Review, American Economic Association, pages 335-341.
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    9. repec:pri:cheawb:deaton_income_health_and_wellbeing_around_the_world_evidence_%20from_gallup_world_poll_jep_spring2008.pdf is not listed on IDEAS
    10. Robert J. MacCulloch & Rafael Di Tella & Andrew J. Oswald, 2001. "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness," American Economic Review, American Economic Association, pages 335-341.
    11. Jesse Bricker & Brian K. Bucks & Arthur Kennickell & Traci L. Mach & Kevin Moore, 2011. "Drowning or Weathering the Storm? Changes in Family Finances from 2007 to 2009," NBER Working Papers 16985, National Bureau of Economic Research, Inc.
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    16. repec:pse:psecon:2008-67 is not listed on IDEAS
    17. Michael D. Hurd & Susann Rohwedder, 2010. "Effects of the Financial Crisis and Great Recession on American Households," NBER Working Papers 16407, National Bureau of Economic Research, Inc.
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    More about this item

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H0 - Public Economics - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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