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Is Happiness Infectious?

  • John Knight
  • Ramani Gunatilaka

The paper uses an appropriate survey from rural China to answer the question: Is happiness infectious, i.e. does the happiness of an individual depend positively on the happiness of their reference group?� The evidence is consistent with this hypothesis, but the challenge is to solve the 'reflection problem', i.e. is the apparent effect of neighbours' happiness on own happiness�a causal one or merely a reflection?� A 'quasi-panel' approach is adopted, treating villages as groups and individuals as multiple observations within each group, and using an error components 2SLS estimator.� The results suggest that a major part of the relationship is indeed causal: Adam Smith's insight was correct!� The normative and policy implications are briefly considered.

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File URL: http://www.economics.ox.ac.uk/materials/working_papers/paper446.pdf
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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 446.

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Date of creation: 01 Aug 2009
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Handle: RePEc:oxf:wpaper:446
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  18. McBride, Michael, 2001. "Relative-income effects on subjective well-being in the cross-section," Journal of Economic Behavior & Organization, Elsevier, vol. 45(3), pages 251-278, July.
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