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Concerns about the Euro and Happiness in Germany during Times of Crisis

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  • Adrian Chadi

    () (Institute for Labour Law and Industrial Relations in the EU, University of Trier)

Abstract

This empirical study investigates if people’s concerns about the euro currency affect their life satisfaction. A minority of very concerned individuals appear to be unhappy, which cannot be explained by personality or other observable factors typically affecting well-being. As a novelty, this investigation exploits exogenous variation in reported concerns by using the intensity of media coverage on the euro crisis with its extraordinary events throughout the year 2011 as an instrument. Results from the application of several empirical approaches confirm that there is an effect from being concerned about the euro on people’s satisfaction with life. The first potential explanation is that perceived economic insecurity works as a transmission channel, but this is not fully supported by the empirical evidence. A second explanation suggests that political beliefs and euro-skeptic attitudes are at play and may trigger unhappiness as a consequence of a perceived lack of representation in German politics. In line with this argument, a regional analysis links the variation in unhappiness among concerned citizens to the actual votes for Germany’s first major anti-euro party in the subsequent federal elections.

Suggested Citation

  • Adrian Chadi, 2015. "Concerns about the Euro and Happiness in Germany during Times of Crisis," IAAEU Discussion Papers 201503, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  • Handle: RePEc:iaa:dpaper:201503
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    Citations

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    Cited by:

    1. Otrachshenko, Vladimir & Popova, Olga & Tavares, José, 2016. "Psychological costs of currency transition: evidence from the euro adoption," European Journal of Political Economy, Elsevier, vol. 45(C), pages 89-100.
    2. repec:bla:ecinqu:v:55:y:2017:i:4:p:1813-1832 is not listed on IDEAS
    3. Cheng, Zhiming & King, Stephen P. & Smyth, Russell & Wang, Haining, 2016. "Housing property rights and subjective wellbeing in urban China," European Journal of Political Economy, Elsevier, vol. 45(S), pages 160-174.
    4. repec:spr:inrvec:v:65:y:2018:i:2:d:10.1007_s12232-017-0290-7 is not listed on IDEAS
    5. Adrian Chadi & Matthias Krapf, 2017. "The Protestant Fiscal Ethic: Religious Confession And Euro Skepticism In Germany," Economic Inquiry, Western Economic Association International, vol. 55(4), pages 1813-1832, October.
    6. repec:taf:applec:v:50:y:2018:i:28:p:3029-3038 is not listed on IDEAS
    7. Emilio Colombo & Valentina Rotondi & Luca Stanca, 2018. "Macroeconomic conditions and well-being: do social interactions matter?," Applied Economics, Taylor & Francis Journals, vol. 50(28), pages 3029-3038, June.
    8. repec:eee:poleco:v:58:y:2019:i:c:p:245-261 is not listed on IDEAS

    More about this item

    Keywords

    Life satisfaction; euro crisis; currency; concerns; political protest; sensitive information; media coverage; instrumental variable; SOEP;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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