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The asymmetric experience of positive and negative economic growth: global evidence using subjective well-being data

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  • De Neve, Jan-Emmanuel
  • Ward, George W.
  • de Keulenaer, Femke
  • van Landeghem, Bert
  • Kavetsos, Georgios
  • Norton, Michael I.

Abstract

Are individuals more sensitive to losses than gains in macroeconomic growth? Using subjective well-being measures across three large data sets, we observe an asymmetry in the way positive and negative economic growth are experienced, with losses having more than twice as much impact on individual happiness as compared to equivalent gains. We use Gallup World Poll data drawn from 151 countries, BRFSS data taken from a representative sample of 2.5 million US respondents, and Eurobarometer data that cover multiple business cycles over four decades. This research provides a new perspective on the welfare cost of business cycles with implications for growth policy and our understanding of the long-run relationship between GDP and subjective well-being.

Suggested Citation

  • De Neve, Jan-Emmanuel & Ward, George W. & de Keulenaer, Femke & van Landeghem, Bert & Kavetsos, Georgios & Norton, Michael I., 2014. "The asymmetric experience of positive and negative economic growth: global evidence using subjective well-being data," LSE Research Online Documents on Economics 60054, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:60054
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    Cited by:

    1. Drews, Stefan & Antal, Miklós, 2016. "Degrowth: A “missile word” that backfires?," Ecological Economics, Elsevier, vol. 126(C), pages 182-187.
    2. Burkhauser, Richard V. & De Neve, Jan-Emmanuel & Powdthavee, Nattavudh, 2016. "Top Incomes and Human Well-being Around the World," IZA Discussion Papers 9677, Institute for the Study of Labor (IZA).
    3. Alem, Yonas & Colmer, Jonathan, 2015. "Consumption smoothing and the welfare cost ofuncertainty," LSE Research Online Documents on Economics 63816, London School of Economics and Political Science, LSE Library.
    4. D'Orlando, Fabio & Ferrante, Francesco, 2015. "The benefits of stabilization policies revisited," MPRA Paper 67321, University Library of Munich, Germany.
    5. Alan Piper, 2014. "Zukunftsangst! Fear of (and Hope for) the Future and Its Impact on Life Satisfaction," SOEPpapers on Multidisciplinary Panel Data Research 706, DIW Berlin, The German Socio-Economic Panel (SOEP).
    6. Yonas Alem & Jonathan Colmer, 2015. "Consumption smoothing and the welfare cost of uncertainty," GRI Working Papers 118b, Grantham Research Institute on Climate Change and the Environment.
    7. Tonzer, Lena, 2017. "Uncertainty, financial crises, and subjective well-being," IWH Discussion Papers 2/2017, Halle Institute for Economic Research (IWH).
    8. Yonas Alem & Jonathan Colmer, 2015. "Consumption Smoothing and the Welfare Cost of Uncertainty," CEP Discussion Papers dp1369, Centre for Economic Performance, LSE.
    9. repec:cep:stieop:59 is not listed on IDEAS
    10. Yonas Alem & Jonathan Colmer, 2015. "Consumption Smoothing and the Welfare Cost of Uncertainty," STICERD - Economic Organisation and Public Policy Discussion Papers Series 059, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    11. Easterlin, Richard A., 2016. "Paradox Lost?," IZA Discussion Papers 9676, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    economic growth; business cycles; subjective well-being; loss aversion;

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • D69 - Microeconomics - - Welfare Economics - - - Other
    • I39 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Other
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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