IDEAS home Printed from https://ideas.repec.org/p/csn/wpaper/2019-04.html
   My bibliography  Save this paper

Structural changes in economic growth and well-being. The case of Italy’s parabola

Author

Listed:
  • Maurizio Pugno

    (University of Cassino and Lazio Meridionale)

  • Francesco Sarracino

    (Institut National de la Statistique et des Etudes Economiques du Grand-Duché du Luxembourg)

Abstract

The controversies on the relationship (called ‘gradient’) between the long-run trends of GDP and subjective well-being oppose those who claim that the gradient is positive, to those who argue that it is nil. The possible existence of structural breaks of the gradient within the same country is a challenge to both views. By focusing on the case of Italy, we show that the long-run trends of GDP and of well-being turned from increasing to decreasing, and that the gradient exhibits a rise through two structural breaks. We adopt macro- and micro-economic approaches to explain why the gradient changes. We find evidence consistent with the ‘loss aversion’ hypothesis. In addition, the gradient changed because the erosion of trust in others, the increase of financial dissatisfaction and worsened health hinder well-being independently from income.

Suggested Citation

  • Maurizio Pugno & Francesco Sarracino, 2019. "Structural changes in economic growth and well-being. The case of Italy’s parabola," Working Papers 2019-04, Universita' di Cassino, Dipartimento di Economia e Giurisprudenza.
    • Handle: RePEc:csn:wpaper:2019-04
    as

    Download full text from publisher

    File URL: http://dipeg-wpe.unicas.it/files/wp_201904.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Leonardo Becchetti & Riccardo Massari & Paolo Naticchioni, 2014. "The drivers of happiness inequality: suggestions for promoting social cohesion," Oxford Economic Papers, Oxford University Press, vol. 66(2), pages 419-442.
    2. Anonymous, 1990. "Editor's Report, 1990," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 22(1), pages 221-223, July.
    3. Conchita D’Ambrosio & Joachim Frick, 2007. "Income Satisfaction and Relative Deprivation: An Empirical Link," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 81(3), pages 497-519, May.
    4. Bartolini, Stefano & Bonatti, Luigi, 2008. "Endogenous growth, decline in social capital and expansion of market activities," Journal of Economic Behavior & Organization, Elsevier, vol. 67(3-4), pages 917-926, September.
    5. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 95-144, March.
    6. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1251-1288.
    7. Andrew E. Clark & Yannis Georgellis, 2010. "Back to baseline in Britain: Adaptation in the BHPS," Working Papers halshs-00564821, HAL.
    8. Ed Diener, 2006. "Guidelines for National Indicators of Subjective Well-Being and Ill-Being," Journal of Happiness Studies, Springer, vol. 7(4), pages 397-404, November.
    9. Betsey Stevenson & Justin Wolfers, 2008. "Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 1-102.
    10. John F. Helliwell & Christopher P. Barrington‐Leigh, 2010. "Viewpoint: Measuring and understanding subjective well‐being," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 43(3), pages 729-753, August.
    11. Andrew E. Clark, 2018. "Four Decades of the Economics of Happiness: Where Next?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(2), pages 245-269, June.
    12. Stephen Jenkins, 2015. "World income inequality databases: an assessment of WIID and SWIID," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(4), pages 629-671, December.
    13. Bartolini, Stefano & Sarracino, Francesco, 2015. "The Dark Side of Chinese Growth: Declining Social Capital and Well-Being in Times of Economic Boom," World Development, Elsevier, vol. 74(C), pages 333-351.
    14. Gabriella Berloffa & Paola Villa, 2010. "Differences In Equivalent Income Across Cohorts Of Households: Evidence From Italy," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(4), pages 693-714, December.
    15. Mikucka, Malgorzata & Sarracino, Francesco & Dubrow, Joshua K., 2017. "When Does Economic Growth Improve Life Satisfaction? Multilevel Analysis of the Roles of Social Trust and Income Inequality in 46 Countries, 1981–2012," World Development, Elsevier, vol. 93(C), pages 447-459.
    16. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    17. Conchita D'Ambrosio & Joachim R. Frick, 2012. "Individual Wellbeing in a Dynamic Perspective," Economica, London School of Economics and Political Science, vol. 79(314), pages 284-302, April.
    18. Hilke Brockmann & Jan Delhey & Christian Welzel & Hao Yuan, 2009. "The China Puzzle: Falling Happiness in a Rising Economy," Journal of Happiness Studies, Springer, vol. 10(4), pages 387-405, August.
    19. Easterlin, Richard A., 1974. "Does Economic Growth Improve the Human Lot? Some Empirical Evidence," MPRA Paper 111773, University Library of Munich, Germany.
    20. Kaiser, Caspar & Vendrik, Maarten C. M., 2019. "How threatening are transformations of reported happiness to subjective wellbeing research?," SocArXiv gzt7a, Center for Open Science.
    21. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    22. Jan-Emmanuel De Neve & George Ward & Femke De Keulenaer & Bert Van Landeghem & Georgios Kavetsos & Michael I. Norton, 2018. "The Asymmetric Experience of Positive and Negative Economic Growth: Global Evidence Using Subjective Well-Being Data," The Review of Economics and Statistics, MIT Press, vol. 100(2), pages 362-375, May.
    23. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    24. Stefano Bartolini & Ennio Bilancini & Maurizio Pugno, 2013. "Did the Decline in Social Connections Depress Americans’ Happiness?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 110(3), pages 1033-1059, February.
    25. Ben Jann, 2008. "A Stata implementation of the Blinder-Oaxaca decomposition," ETH Zurich Sociology Working Papers 5, ETH Zurich, Chair of Sociology, revised 14 May 2008.
    26. Andrew E. Clark & Sarah Flèche & Nick Powdthavee & George Ward, 2017. "The key determinants of happiness and misery," Post-Print halshs-01513376, HAL.
    27. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    28. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, July.
    29. Michael Hagerty & Ruut Veenhoven, 2003. "Wealth and Happiness Revisited – Growing National Income Does Go with Greater Happiness," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 64(1), pages 1-27, October.
    30. Herbst, Chris M., 2011. "‘Paradoxical’ decline? Another look at the relative reduction in female happiness," Journal of Economic Psychology, Elsevier, vol. 32(5), pages 773-788.
    31. Eugenio Proto & Aldo Rustichini, 2013. "A Reassessment of the Relationship between GDP and Life Satisfaction," PLOS ONE, Public Library of Science, vol. 8(11), pages 1-10, November.
    32. 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.
    33. John F. Helliwell & Christopher P. Barrington-Leigh, 2010. "Measuring and Understanding Subjective Well-Being," NBER Working Papers 15887, National Bureau of Economic Research, Inc.
    34. Frederick Solt, 2016. "The Standardized World Income Inequality Database," Social Science Quarterly, Southwestern Social Science Association, vol. 97(5), pages 1267-1281, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. František Murgaš & František Petrovič & Anna Tirpáková, 2022. "Social Capital as a Predictor of Quality of Life: The Czech Experience," IJERPH, MDPI, vol. 19(10), pages 1-17, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sarracino, Francesco & O'Connor, Kelsey J. & Ono, Hiroshi, 2019. "Making economic growth and well-being compatible: evidence from Japan," MPRA Paper 93010, University Library of Munich, Germany.
    2. Francesco Sarracino & Marcin Piekałkiewicz, 2021. "The Role of Income and Social Capital for Europeans’ Well-Being During the 2008 Economic Crisis," Journal of Happiness Studies, Springer, vol. 22(4), pages 1583-1610, April.
    3. Bartolini, Stefano & Sarracino, Francesco, 2015. "The Dark Side of Chinese Growth: Declining Social Capital and Well-Being in Times of Economic Boom," World Development, Elsevier, vol. 74(C), pages 333-351.
    4. Francesco Sarracino & Małgorzata Mikucka, 2019. "Consume More, Work Longer, and Be Unhappy: Possible Social Roots of Economic Crisis?," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 14(1), pages 59-84, March.
    5. Bartolini, Stefano & Sarracino, Francesco, 2014. "The dark side of Chinese growth: Explaining decreasing well-being in times of economic boom," MPRA Paper 57765, University Library of Munich, Germany.
    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. Sarracino, Francesco, 2013. "Determinants of subjective well-being in high and low income countries: Do happiness equations differ across countries?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 42(C), pages 51-66.
    8. Piekalkiewicz, Marcin, 2016. "Money, Social Capital and Materialism. Evidence from Happiness Data," EconStor Preprints 130185, ZBW - Leibniz Information Centre for Economics.
    9. Francesco Sarracino & Kelsey J. O’Connor, 2021. "Economic growth and well-being beyond the Easterlin paradox," Chapters, in: Luigino Bruni & Alessandra Smerilli & Dalila De Rosa (ed.), A Modern Guide to the Economics of Happiness, chapter 9, pages 162-188, Edward Elgar Publishing.
    10. Jérémy Celse, 2017. "An Experimental Investigation of the Impact of Absolute and Relative Inequalities on Individual Satisfaction," Journal of Happiness Studies, Springer, vol. 18(4), pages 939-958, August.
    11. Burger,Martijn & Hendriks,Martijn & Ianchovichina,Elena, 2022. "Anatomy of Brazil’s Subjective Well-Being : A Tale of Growing Discontent and Polarization in the 2010s," Policy Research Working Paper Series 9924, The World Bank.
    12. A. l. Moro-Egido & M. Navarro & A. Sánchez, 2022. "Changes in Subjective Well-Being Over Time: Economic and Social Resources do Matter," Journal of Happiness Studies, Springer, vol. 23(5), pages 2009-2038, June.
    13. Stefano Bartolini & Francesco Sarracino, 2021. "Happier and Sustainable. Possibilities for a post-growth society," Department of Economics University of Siena 855, Department of Economics, University of Siena.
    14. BARTOLINI Stefano & SARRACINO Francesco, 2011. "Happy for How Long? How Social Capital and GDP relate to Happiness over Time," LISER Working Paper Series 2011-60, Luxembourg Institute of Socio-Economic Research (LISER).
    15. Kaizhi Yu & Yun Zhang & Hong Zou & Chenchen Wang, 2019. "Absolute Income, Income Inequality and the Subjective Well-Being of Migrant Workers in China: Toward an Understanding of the Relationship and Its Psychological Mechanisms," IJERPH, MDPI, vol. 16(14), pages 1-27, July.
    16. T. Lakshmanasamy & K. Maya, 2020. "The Effect of Income Inequality on Happiness Inequality in India: A Recentered Influence Function Regression Estimation and Life Satisfaction Inequality Decomposition," Indian Journal of Human Development, , vol. 14(2), pages 161-181, August.
    17. Stefano Bartolini & Francesco Sarracino, 2014. "It's not the economy, stupid! How social capital and GDP relate to happiness over time," Papers 1411.2138, arXiv.org.
    18. Hajdu, Tamás & Hajdu, Gábor, 2011. "A hasznosság és a relatív jövedelem kapcsolatának vizsgálata magyar adatok segítségével [Examining the relation of utility and relative income using Hungarian data]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 56-73.
    19. Andrew E. Clark & Claudia Senik, 2010. "Will GDP growth increase happiness in developing countries?," PSE Working Papers halshs-00564985, HAL.
    20. Jan-Emmanuel De Neve & George Ward & Femke De Keulenaer & Bert Van Landeghem & Georgios Kavetsos & Michael I. Norton, 2018. "The Asymmetric Experience of Positive and Negative Economic Growth: Global Evidence Using Subjective Well-Being Data," The Review of Economics and Statistics, MIT Press, vol. 100(2), pages 362-375, May.

    More about this item

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:csn:wpaper:2019-04. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gennaro Zezza (email available below). General contact details of provider: https://edirc.repec.org/data/crcasit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.