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Do Losses Bite More than Gains? Evidence from a Panel Quantile Regression Analysis of Subjective Well-being in Japan

Author

Listed:
  • Zheng Fang

    (School of Humanities and Social Sciences, Nanyang Technological University, 14 Nanyang Drive, 637332, Singapore)

  • Yoko Niimi

    (Asian Growth Research Institute, 11-4 Ohtemachi, Kokurakita-ku, Kitakyushu, Fukuoka 803-0814, Japan)

Abstract

This paper conducts an empirical analysis of the distributional effects of the determinants of happiness by applying quantile regression techniques to panel data from the “Preference Parameters Study” of Osaka University, a nationally representative survey conducted in Japan. The key question examined in the paper is whether we observe an asymmetry between the effects of positive and negative changes on individual happiness, and if it exists, whether it is observed uniformly across the happiness distribution. Such an asymmetry is referred to as loss aversion in prospect theory. Loss aversion effects are analyzed with respect to relative income as well as expected future income changes. We find that feeling relatively poor has a greater negative effect on happiness than the positive effect of feeling relatively rich, i.e., losses bite more than gains. However, no evidence for loss aversion is detected with respect to expected future income changes as individual happiness is found to be more sensitive to gains than to losses, though the happiness of the least happy group is found to be affected more by losses than by equivalent gains.

Suggested Citation

  • Zheng Fang & Yoko Niimi, 2015. "Do Losses Bite More than Gains? Evidence from a Panel Quantile Regression Analysis of Subjective Well-being in Japan," Economic Growth Centre Working Paper Series 1507, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
  • Handle: RePEc:nan:wpaper:1507
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    References listed on IDEAS

    as
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    Cited by:

    1. Martí­n Leites & Xavier Ramos, 2017. "The effect of relative concern on life satisfaction: Relative deprivation and loss aversion," Documentos de Trabajo (working papers) 17-18, Instituto de Economia - IECON.

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    Keywords

    Happiness; Japan; loss aversion; panel quantile regression; subjective well-being;

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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