There is growing interest in alternative measures of national wellbeing, such as happiness or life satisfaction. This column argues that a small number of survey questions are unlikely to capture all the aspects of wellbeing that matter to people. Using a stated-preference survey, the authors find several aspects of wellbeing to be important that are not commonly included in wellbeing surveys, such as those related to family, values, and security. This approach could be used to provide weights for wellbeing indices.
Daniel J. Benjamin, Samantha Cunningham, Ori Heffetz, Miles Kimball , Nichole Szembrot, Friday, January 2, 2015
Claudio Michelacci, Hernán Ruffo, Tuesday, November 18, 2014
Like any insurance mechanism, unemployment benefits involve a trade-off between risk sharing and moral hazard. Whereas previous studies have concluded that unemployment insurance is close to optimal in the US, this column argues that replacement rates should vary over the life cycle. Young people typically have little means to smooth consumption during a spell of unemployment, while the moral hazard problems are minor – regardless of replacement rates, the young want jobs to improve their lifetime career prospects and to build up human capital.
Alex Bryson, John Forth, Lucy Stokes, Monday, November 17, 2014
It is generally agreed that firms can improve their employees’ wellbeing through improvements in job quality – but is it in their economic interests to do so? This column reports research showing that satisfied employees and higher productivity go together. Analysis of the British Workplace Employment Relations Survey finds that employee job satisfaction is positively associated with workplace financial performance, labour productivity, and the quality of output and service.
Edward Glaeser, Joshua Gottlieb, Oren Ziv, Wednesday, October 15, 2014
Governments are now measuring happiness, or subjective wellbeing, and some have begun trying to maximise it. This column discusses recent research showing that happiness is not the same thing as utility. The choices people make suggest that they have desires and objectives other than happiness. It is therefore possible to make people worse off while increasing their reported subjective wellbeing.
Alex Edmans, Friday, July 25, 2014
Happy workers might well be more productive than unhappy ones, but high worker satisfaction could also be a sign that workers are overpaid or underworked. This column examines the link between worker satisfaction and future stock returns in 14 countries. In most but not all countries, employee satisfaction is associated with higher future stock returns. Abnormal returns to companies with high worker satisfaction are significantly increasing in the flexibility of their countries’ labour markets.
Timothy N. Bond, Kevin Lang, Friday, July 4, 2014
Self-reported measures of happiness are growing in popularity as alternatives to GDP. This column presents a novel statistical critique of the validity of comparing such measures across groups. Since monotonic transformations of individuals’ happiness levels can reverse average happiness rankings between countries, no meaningful comparison can be made without assumptions on the distribution of happiness.
Diane Coyle, Monday, June 9, 2014
As a measure of economic activity, GDP is imperfect, but no more so than any single indicator of the whole economy. Yet public policy debate about the economy is often focused on GDP growth to the exclusion of other important considerations. This Vox Talk argues the case for a ‘dashboard’ of alternative indicators that, in addition to measuring economic activity, could also capture social welfare, sustainability and the benefits of innovation.
Angus Deaton, Arthur Stone, Tuesday, March 4, 2014
Study after study has shown that those who live with children are less satisfied with their lives than those who do not. Is there something wrong with these empirical analyses? Or is it that happiness measures are unreliable? This column argues that the results are correct but that comparisons of the wellbeing of parents and non-parents are of no help at all for people trying to decide whether to have children.
Diane Coyle, Monday, February 17, 2014
Criticism of Gross Domestic Product (GDP) as an indicator of the health of the economy has grown in recent years, in part because of a new focus on measures of subjective well-being or ‘happiness’. This column argues that the debate needs to distinguish between the different purposes of measurement: economic activity, social welfare, and sustainability are distinct concepts and cannot be captured by a single indicator. There are good arguments for paying less attention to GDP and more to indicators of welfare and sustainability, but it would be a mistake to adjust or replace GDP.
Eugenio Proto, Aldo Rustichini, Saturday, January 11, 2014
The link between higher national income and higher national life satisfaction is critical to economic policymaking. This column presents new evidence that the connection is hump-shaped. There is a clear, positive relation in the poorer nations and regions, but it flattens out at around $30,000–$35,000, and then turns negative.
Federica Liberini, Eugenio Proto, Michela Redoano, Friday, November 15, 2013
Retrospective voting – voting for incumbents if one’s situation has improved under the politician’s watch – is a well-established pattern. This column shows that this pattern also applies when ‘improvement’ is measured by a subjective measure of well-being. Among the stark results discussed is the finding that newly widowed women are 10% less likely to be pro-incumbent than the control group.
Andrew J Oswald, Wednesday, December 5, 2012
Humans tend to go through midlife crises regardless of context. So too, it appears, do apes. This column draws on recent research showing apes’ midlives to be, like humans’, dogged by the same pattern of unhappiness.
John Feddersen, Robert Metcalfe, Mark Wooden, Friday, November 2, 2012
Hurricane Sandy destroyed an massive amount of US wealth, but the impact on human wellbeing surely goes far beyond any dollar figure. This column argues that the ‘subjective wellbeing’ literature can inform policy choices in the area of emergency response. Since the ‘happiness’ cost of short-term weather changes far exceeds that of long-term changes, prevention policies are likely to yield a higher payoff in terms of life satisfaction than rebuilding policies with equivalent financial payoffs.
Kees Koedijk, Meir Statman, Rachel Campbell, Friday, March 30, 2012
Does more money always make you happy? This column argues that financial wellbeing is distinct from income. People with low income can enjoy financial wellbeing as high as people with high incomes as long as their aspirations do not exceed their incomes.
Bruno S Frey, Jana Gallus, Wednesday, March 21, 2012
The world appears to be unfair. Those who are prettier earn a higher salary and are also happier. This column argues it is still not hopeless for those less blessed with looks. Appropriate clothing, hairstyles, and good teeth can help, as can choosing a profession where expertise is clearly central and beauty of less importance.
Jan van Ours, Anne Gielen, Monday, February 13, 2012
Much research has documented that unemployment makes people unhappy. But does unhappiness spur the unemployed to look harder for jobs? And if so, why do governments need to help them find work with active labour market policies? CEPR DP8842 finds that the unhappiest of the unemployed do search harder for jobs, but don’t find them faster – suggesting that even the most motivated jobseekers could benefit from activation policies.
Carol Graham, Sunday, July 31, 2011
The UK government is the latest to consider incorporating measures of happiness in its policymaking. This column takes stock of what we know from investigations into people’s wellbeing. It concludes that there is still much to resolve before a measure of gross national happiness is possible – or indeed desirable.
Jörn-Steffen Pischke, Friday, June 3, 2011
Economists have been venturing into the realm of human emotions for some years now. This column provides a unique approach to investigating the link between income and happiness. It finds that while money really can buy happiness, there are many other factors that can get in the way.
Christoph M Schmidt, Sonja C Kassenboehmer, Monday, January 31, 2011
In Sarkozy's controversial 2009 Commission on the Measurement of Economic Performance and Social Progress, Stiglitz and Sen argued that standard indicators of material well-being no longer suffice as measures of welfare. They conclude that other measures such as health, security, happiness, and environmental impact should figure more importantly in economics. The authors of CEPR DP8225 reply that these measures add little value to the economist's toolbox.
Andreas Knabe, Ronnie Schöb, Joachim Weimann, Wednesday, November 17, 2010
“We were happy in those days… Because we were poor”, goes the old Monty Python sketch. This column suggests there might be some shred of truth in this joke. It finds that while unemployed people report being less satisfied with their life in general, their emotional wellbeing experienced during day-to-day activities does not seem to suffer at all.