IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/101080.html

Subjective Well-Being Approach to Valuing Unemployment: Direct and Indirect Cost

Author

Listed:
  • Beja, Edsel Jr.

Abstract

The study presents a subjective well-being approach to estimating the direct and indirect cost of unemployment. Using a combined dataset from the World Values Survey and the World Development Indicators, the study finds that the indirect cost of unemployment is about twice the size of the direct cost of unemployment. The overall estimate for the cost of unemployment turns out to be 1.5 income quintiles change in income. The finding of the study not only confirms a high price to pay for not working out the unemployment problem but also highlights the importance of public policy that seeks to guarantee employment and provide social protection for the unemployed.

Suggested Citation

  • Beja, Edsel Jr., 2016. "Subjective Well-Being Approach to Valuing Unemployment: Direct and Indirect Cost," MPRA Paper 101080, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:101080
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/101080/1/MPRA_paper_101080.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Daniel Kahneman & Peter P. Wakker & Rakesh Sarin, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 375-406.
    2. repec:bla:econom:v:68:y:2001:i:270:p:221-41 is not listed on IDEAS
    3. Angus Deaton, 2008. "Income, Health, and Well-Being around the World: Evidence from the Gallup World Poll," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 53-72, Spring.
    4. Frey, Bruno S & Stutzer, Alois, 2000. "Happiness, Economy and Institutions," Economic Journal, Royal Economic Society, vol. 110(466), pages 918-938, October.
    5. Krueger, Alan B. & Schkade, David A., 2008. "The reliability of subjective well-being measures," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1833-1845, August.
    6. William A. Darity & Arthur H. Goldsmith, 1996. "Social Psychology, Unemployment and Macroeconomics," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 121-140, Winter.
    7. Clark, Andrew & Knabe, Andreas & Rätzel, Steffen, 2010. "Boon or bane? Others' unemployment, well-being and job insecurity," Labour Economics, Elsevier, vol. 17(1), pages 52-61, January.
    8. Blanchflower, David G. & Oswald, Andrew J., 2004. "Well-being over time in Britain and the USA," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1359-1386, July.
    9. De Neve, Jan-Emmanuel & Ward, George, 2017. "Happiness at work," LSE Research Online Documents on Economics 83604, London School of Economics and Political Science, LSE Library.
    10. Edsel Beja, 2015. "Direct and indirect impacts of parenthood on happiness," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 62(4), pages 307-318, December.
    11. Easterlin, Richard A., 1974. "Does Economic Growth Improve the Human Lot? Some Empirical Evidence," MPRA Paper 111773, University Library of Munich, Germany.
    12. Edsel Beja Jr., 2013. "Subjective Well-Being Approach to the Valuation of International Development: Evidence for the Millennium Development Goals," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 111(1), pages 141-159, March.
    13. J.J. Ehrhardt & W.E. Saris & R. Veenhoven, 2000. "Stability of Life-satisfaction over Time," Journal of Happiness Studies, Springer, vol. 1(2), pages 177-205, June.
    14. Edsel Beja, 2012. "Subjective Well-Being Approach to Environmental Valuation: Evidence for Greenhouse Gas Emissions," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 109(2), pages 243-266, November.
    15. Layard, R. & Mayraz, G. & Nickell, S., 2008. "The marginal utility of income," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1846-1857, August.
    16. Daniel Kahneman & Alan B. Krueger, 2006. "Developments in the Measurement of Subjective Well-Being," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 3-24, Winter.
    17. Andrew Clark & Yannis Georgellis & Peter Sanfey, 2001. "Scarring: The Psychological Impact of Past Unemployment," Economica, London School of Economics and Political Science, vol. 68(270), pages 221-241, May.
    18. John F. Helliwell & Haifang Huang, 2014. "New Measures Of The Costs Of Unemployment: Evidence From The Subjective Well-Being Of 3.3 Million Americans," Economic Inquiry, Western Economic Association International, vol. 52(4), pages 1485-1502, October.
    19. Andreas Knabe & Steffen Rätzel, 2011. "Scarring or Scaring? The Psychological Impact of Past Unemployment and Future Unemployment Risk," Economica, London School of Economics and Political Science, vol. 78(310), pages 283-293, April.
    Full references (including those not matched with items on IDEAS)

    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. Thi Truong An Hoang & Andreas Knabe, 2021. "Time Use, Unemployment, and Well-Being: An Empirical Analysis Using British Time-Use Data," Journal of Happiness Studies, Springer, vol. 22(6), pages 2525-2548, August.
    2. Andreas Knabe & Steffen Rätzel & Ronnie Schöb & Joachim Weimann, 2010. "Dissatisfied with Life but Having a Good Day: Time-use and Well-being of the Unemployed," Economic Journal, Royal Economic Society, vol. 120(547), pages 867-889, September.
    3. Stutzer, Alois & Frey, Bruno S., 2012. "Recent Developments in the Economics of Happiness: A Selective Overview," IZA Discussion Papers 7078, Institute of Labor Economics (IZA).
    4. Powdthavee, Nattavudh, 2008. "Putting a price tag on friends, relatives, and neighbours: Using surveys of life satisfaction to value social relationships," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(4), pages 1459-1480, August.
    5. 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.
    6. Vendrik, Maarten C.M. & Woltjer, Geert B., 2007. "Happiness and loss aversion: Is utility concave or convex in relative income?," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1423-1448, August.
    7. Matthew Shannon, 2021. "The Impact of Victimisation on Subjective Well-Being," Working Papers 202123, School of Economics, University College Dublin.
    8. Yasar, Rusen, 2017. "Subjective well-being and income: A compromise between Easterlin paradox and its critiques," Economics Discussion Papers 2017-113, Kiel Institute for the World Economy (IfW Kiel).
    9. Edsel Beja Jr., 2013. "Subjective Well-Being Approach to the Valuation of International Development: Evidence for the Millennium Development Goals," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 111(1), pages 141-159, March.
    10. Bruno S. Frey & Anthony Gullo, 2021. "Does Sports Make People Happier, or Do Happy People More Sports?," Journal of Sports Economics, , vol. 22(4), pages 432-458, May.
    11. 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.
    12. Caporale, Guglielmo Maria & Georgellis, Yannis & Tsitsianis, Nicholas & Yin, Ya Ping, 2009. "Income and happiness across Europe: Do reference values matter?," Journal of Economic Psychology, Elsevier, vol. 30(1), pages 42-51, February.
    13. Zhang, Yinjunjie & Xu, Zhicheng Phil & Palma, Marco A., "undated". "Misclassification Errors of Subjective Well-being: A New Approach to Mapping Happiness," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258553, Agricultural and Applied Economics Association.
    14. repec:hum:wpaper:sfb649dp2013-035 is not listed on IDEAS
    15. Gregor Gonza & Anže Burger, 2017. "Subjective Well-Being During the 2008 Economic Crisis: Identification of Mediating and Moderating Factors," Journal of Happiness Studies, Springer, vol. 18(6), pages 1763-1797, December.
    16. Welsch, Heinz, 2009. "Implications of happiness research for environmental economics," Ecological Economics, Elsevier, vol. 68(11), pages 2735-2742, September.
    17. Cordero, José Manuel & Salinas-Jiménez, Javier & Salinas-Jiménez, M Mar, 2017. "Exploring factors affecting the level of happiness across countries: A conditional robust nonparametric frontier analysis," European Journal of Operational Research, Elsevier, vol. 256(2), pages 663-672.
    18. Clingingsmith, David, 2017. "Negative Emotions, Income, and Welfare: Causal Estimates from the PSID," SocArXiv q2mxt, Center for Open Science.
    19. Stutzer, Alois & Frey, Bruno S., 2010. "Recent Advances in the Economics of Individual Subjective Well-Being," IZA Discussion Papers 4850, Institute of Labor Economics (IZA).
    20. Powdthavee, Nattavudh & Stutzer, Alois, 2014. "Economic Approaches to Understanding Change in Happiness," IZA Discussion Papers 8131, Institute of Labor Economics (IZA).
    21. Arie Kapteyn & Jinkook Lee & Caroline Tassot & Hana Vonkova & Gema Zamarro, 2015. "Erratum to: Dimensions of Subjective Well-Being," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 124(1), pages 317-317, October.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

    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:pra:mprapa:101080. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.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.