1. Layard – Happiness and Public Policy: A Challenge to the Profession
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Public economics theory: needs reform
Fact: People, with more purchasing power, are not happier.
Explanations: 1. Comparison with others, 2. Adaptation to higher income, 3. Our tastes are
culturally determined.
1. Measuring Happiness
---Neuroscience evidence on happiness
2. Social Comparison
---Perceived relative income explains happiness better than actual income.
---Policy implication: a corrective tax.
0: people working too hard; above optimum level: distorting
3. Adaptation
---There is evidence that a rise in income raises happiness more initially than it does in the long
run.
---Loss aversion: status quo or endowment effect
4. Tastes
---Social factors can affect our ordinal preferences (indifference curves), and they might also
affect the cardinal happiness we get from a given consumption bundle.
5. Conclusions
---Economics says that utility increases with the opportunities for voluntary exchange, but it
overlooks the huge importance of involuntary interactions between people.
2. Veenhoven – Why Social Policy Needs Subjective Indicators
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Main reasons that policy makers need subjective indicators:
1. Social policy is about both material matters and matters of mentality.
2. Subjective measurement is sometimes more suitable to measuring progress in material
goals relative to objective ones.
3. Inclusive measurement is problematic with objective substance, and using subjective
satisfaction better indicates comprehensive quality.
4. Objective indicators give policy makers little about public preferences (e.g., additional
information from opinion polls).
5. Policy makers must distinguish between “wants” and “needs”, which is available through
assessment of subjective appreciation.
INTRODUCTION:
---objective approaches: similar to mainstream economic indicators research,
subjective approaches: akin to the psychological stream.
THE OBJECTIVE-SUBJECTIVE DISTINCTION:
---2 dimension of difference: difference in substance matter measured, difference in
assessment.
 4 quadrants:
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Top left (objective substance and objective measurement): e.g., the actual “wealth” of a person
when measured by her bank account,
top right (objective substance and subjective assessment/estimate): e.g., measuring wealth by
perceived wealthiness,
bottom left (subjective substance with objective measurement): e.g., measuring happiness by
suicide,
bottom right (subjective substance using subjective appraisal): e.g., measuring happiness by selfreport.
QUALMS ABOUT SUBJECTIVE INDICATORS
---most criticism: bottom right quadrant.
MISGIVINGS ABOUT MENTAL MATTERS
---Pragmatic objections: unstable (i.e., attitudes varying over time),
incomparable (i.e., cannot compare subjective appraisals between
persons; people having different scales in mind; shifting standards over time; subjective
appraisals could not be compared across cultures),
and unintelligible (i.e., largely implicit criteria used for subjective
appraisals; appraisal process quite complex and partly unconscious, which creates interpretation
problem for social policy).
---Essential objections: unrelated to objective reality (i.e., correlations between objective
conditions and subjective appraisals tend to be weak),
incorrect (i.e., validity (the degree to which a research study measures
what it claims to measure) and reliability (the consistency of research findings): self-reports
whether tap things we want to access/said to be imprecise and vulnerable to distortions).
---Validity doubts: There is always the problem that survey questions may evoke responses to
different matter than the investigator had in mind.
---Reliability doubts: problem of precision; the problem that responses may be distorted in a
systematic way.
NEED FOR SUBJECTIVE INDICATORS
---Selecting policy goals: what people want vs. what people need.
---Assessing policy success: goal attainment (e.g., attitudinal data); public support (e.g.,
polls/survey data).
WHY OBJECTIVE INDICATORS FALL SHORT
---Limits to observation.
---Limits to aggregation (e.g., overall judgment).
3. Di Tella & MacCulloch – Some Uses of Happiness Data in Economics
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Richard Easterlin
Economic Growth without Happiness?
---the general of growth without significantly greater happiness
---possible responses:
1) happiness scores carry no meaning,
2) happiness scores aren’t comparable across people,
3) people redefine their happiness scores over time,
4) happiness should depend on health, the environment, leisure and variables other than
income.
2 explanations that a stronger empirical basis: happiness is based on relative rather than
absolute income, happiness adapts to changes in the level of income.
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---“The underlying assumption of a large part of happiness research in economics is that when
people are measured in groups, the combination of their happiness scores does reveal useful
information with which to make comparisons about social welfare.”
Using Happiness Data to Evaluate Policy
---1. Tax on cigarette: “rational addiction” model and “psychological (hyperbolic)” model (the
latter favored)
2. Changes in unemployment benefits: comparing effects on happiness for workers of losing
their safety net with the gains from the lower unemployment rates.
The Inflation-Unemployment Tradeoff
---short-term unemployment sacrifices to permanently lower inflation.
Political Economy
---“The effect of income on happiness appears to depend on the beliefs that people hold.”
Conclusions
---“The patterns observed in the empirical measures of welfare and happiness deserve to play at
least some role in the evaluation of what social goals to emphasize, what macroeconomic
tradeoffs are acceptable and what public policies are pursued.”
4. Veenhoven – Subjective Measures of Well-Being
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“The objective approach has roots in the tradition of social statistics, which date back to the
nineteenth century. The subjective approach stems from survey research, which took off in the
1960s.”
Adds a “mixed” category to form a 3*3 grid
Allardt (1976)’s welfare index:
1) income,
2) quality of housing,
3) political support,
4) social relations,
5) health,
6) education,
7) being irreplaceable,
8) doing interesting things, and
9) life-satisfaction.
Why all these indexes fall short: adding apples with oranges (e.g., life chances vs. life results),
the “fit” that matters, not the “sum”, incomplete indexes.
5. Deci & Ryan – Hedonia, Eudaimonia, and Well-Being: An Introduction
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HEDONIA AND SUBJECTIVE WELL-BEING
---hedonic tradition (more researched): focus on happiness, the presence of positive affect and
the absence of negative affect,
eudaimonic tradition: living life in a full and deeply satisfying way.
---(psychology) well-being: optimal psychological experience and functioning.
---operational definition: 1. High level of positive affect, 2. Low level of negative affect, 3. High
degree of satisfaction with life.
EUDAIMONIC AND FULL FUNCTIONING
---linked to Aristotle and aligned with 20th century humanistic psychology.
---hedonic approach: standard social science model; human organism malleable, gains its
meaning in accord with social and cultural teachings.
---eudaimonic approach: ascribes content to human nature.
PSYCHOLOGICAL WELL-BEING AND EUDAIMONIA
---Ryff (1989)’s model and measure of psychological well-being:
1) Self-acceptance,
2) Personal wealth,
3) Relatedness,
4) Autonomy,
5) Relationships,
6) Environmental mastery, and
7) Purpose in life.
6. Krueger & Schkade – The Reliability of Subjective Well-Being Measures
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2 types of measures of SWB: a standard life satisfaction question & affective experience
measures derived from the Day Reconstruction Method (DRM)
Concerns: interpersonal comparisons of utility; the persistence of subjective well-being
measurements for the same set of individuals over time.
This paper studies the test–retest reliability of a standard self-reported life satisfaction measure
and of affect measures collected from a diary method. The sample consists of 229 women who
were interviewed on Thursdays, two weeks apart, in Spring 2005. The correlation of net affect
(i.e., duration-weighted positive feelings less negative feelings) measured two weeks apart
is .64, which is slightly higher than the correlation of life satisfaction (r=.59). Life satisfaction is
found to correlate much more strongly with income than does net affect. Components of affect
that are more person-specific are found to have a higher test–retest reliability than components
of affect that are more specific to the particular situation. While reliability figures for subjective
well-being measures are lower than those typically found for education, income and many other
microeconomic variables, they are probably sufficiently high to support much of the research
that is currently being undertaken on subjective well-being, particularly in studies where group
means are compared (e.g., across activities or demographic groups).
7. Ryff – Happiness Is Everything, or Is It? Exploration on the Meaning of Psychological
Well-Being
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Literature on psychological well-being: not strongly theory guided.
Central argument: these prior formulations neglect important aspects of positive psychological
functioning.
Similar features of positive psychological functioning:
1) Self-acceptance,
2) Positive relations with others,
3) Autonomy,
4) Environmental mastery,
5) Purpose in life, and
6) Personal growth.
Sample: 321 men and women into young, middle-aged, and older adults.
 A sample of relatively healthy, well-educated, financially comfortable respondents.
Discussion
---Self-acceptance and environmental mastery were strongly associated with measured of life
satisfaction, affect balance, self-esteem, and morale, thereby indicating clear linkages between
theory-guided components of well-being and those evident in current empirical studies.
---Positive relations with others, autonomy, purpose in life, and personal growth—were not as
closely tied to current assessment indexes.
---Previous literature has been guided by somewhat narrow conceptions of positive functioning.
---Life satisfaction, despite its more enduring, long-term quality, has failed to monitor such
features of well-being as autonomy, personal growth, and positive relations with others.
---The crux of the present argument is that these goals and directions in life are, in themselves,
central criteria of psychological well-being.
---Within the limitations of cross-sectional inference, the results point to a highly differentiated
profile of psychological functioning across the adult life cycle. This mix of possible increments in
some aspects of well-being with aging and decrements in others is particularly significant given
the positive selection bias of the present sample. It appears that even well-educated, healthy,
economically comfortable older adults face significant challenge in their efforts to maintain a
sense of purpose and self-realization in later life.
---sex differences  women’s more troubled psychological profiles
---Theories of positive psychological functioning are essentially manifestations of middle-class
values.
8. Oswald & Wu – Objective Confirmation of Subjective Measures of Human Well-Being:
Evidence from the U.S.A.
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There is a state-by-state match between subjective and objective well-being.
Little empirical evidence that reported well-being numbers provide accurate information about
human experience.
U.S. Behavioral Risk Factor Surveillance System, compensating differentials theory, amenity
affects;
Random sample: 1.3 million U.S. inhabitants between 2005 and 2008;
Advantage of BRFSS: its samples provide representative snapshots of the self-described health
of people in the U.S.
BRFSS life satisfaction survey question: “In general, how satisfied are you with your life?”
 Very satisfied
 Satisfied
 Dissatisfied
 Very dissatisfied
The mean of life satisfaction in modern U.S. data are then 3.4 + 0.6 (SD). Well-being answers are
skewed; they are more commonly in the upper end of the possible distribution presented to an
interviewee.
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Independent variables: household income, age, age2, gender, ethnicity, level of education,
mental status, employment status + month dummies, state dummies.
Key contribution: It is possible to measure the pattern of people’s feelings of well-being (their
life-satisfaction scores) across the geography of the U.S.
The study’s test in not primarily an attempt to assess the different kinds of people who are
“happy,” but rather the kinds of geographic areas.
It reveals a notable match between the BRFSS life-satisfaction method and Gabriel’s
compensating differentials methods.
A Pearson coefficient of 0.6  unusually high
Measures of both objective and subjective well-being provide key information about people’s
quality of life. Statistical offices worldwide should incorporate questions to capture people’s life
evaluations, hedonic experiences and priorities in their own surveys.
9. Gabriel & Mattey & Wascher – Compensating Differentials and Evolution in the
Quality-of-Life among U.S. States
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Abstract
---quality-of-life: the household’s aggregate valuation of the nonpecuniary characteristics of a
location.
---quality-of-life rankings:
1) Relatively stable across model specifications and over time for certain poorly ranked,
densely populated midwestern and eastern industrial states and also for other high qualityof-life rural western states.
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2) Substantial deterioration in some states that experienced rapid population growth during
the decade. Reduced spending on infrastructure, increased traffic congestion, and air
pollution account for the bulk of the deterioration in quality-of-life in these states.
Introduction
---an economic sense: quality-of-life concern  the importance of location-specific amenities to
household utility.
---the “compensating differential” approach:
Pecuniary differences across locations in wages or land rents should compensate for the
differences in nonpecuniary characteristics that traditionally are included as elements of the
popular rankings, and thus that differences in wage rates and land rents could be used to
estimate the utility valuation weights (or implicit prices) of the nonpecuniary characteristics of
locations.
---time-series of quality-of-life rankings for the 1981-1990 period.
---one limitation: consistent time-series of many location-specific attributes and amenities are
available only at the state level.
---provides the first significant estimates of changes in state-level quality-of-life and its
determinants.
---results: significant changes in the quality-of-life rankings of U.S. states over the 1981-1990
period.
---"With respect to individual amenities, reduced spending on highways and increased traffic
congestion and air pollution appear to explain the bulk of the deterioration in states with
declining quality-of-life rankings."
Theoretical approach
---Rosen (1979):
If agents face no informational or mobility-related transactions costs and households have
common preferences for amenities, then the Rosen model implies—given a fixed distribution of
amenities—the wages and land rents will vary across locations in order to equilibrate household
utility. In particular, a spatial equilibrium is attained when moving would neither improve
household utility nor reduce firm costs.
---Failure to account for amenity capitalization in the prices of local non-traded goods other than
housing may result in biased estimates of compensating differentials……Here, we add a separate
reduced form equation for the price of local commodities other than housing.
Empirical specification
---substantial heterogeneity across states in terms of how amenities have changed: higher
average commute time, decline in public safety, higher student-teacher ratios, improved air
quality, and higher taxes.
 Large temporal and spatial variation in particular amenities
Results
---Overall, the amenities (together with the annual time dummies) explain about 70-75% of the
variation in (quality-adjusted) housing costs, wages, and the non-housing cost-of-living……
Substantial capitalization of local amenities appears to occur via the non-housing cost-of-living.
---Densely populated industrialized states—including both the midwestern states of Indiana,
Illinois, and Michigan and the eastern seaboard states of New York, New Jersey, and Maryland—
score relatively low in terms of estimated quality-of-life.
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We find that less densely populated, rural western states such as Idaho, Montana, South
Dakota, and Wyoming are ranked highly in the estimated quality-of-life.
---The key to maintaining or increasing quality-of-life appears to have been the management of
population growth.
---In the group with deteriorating quality-of-life ranks, the attribute with the largest
contribution to the deterioration was state and local government expenditures on highways,
which accounted for a movement of 2.7 places in the ranks, on average.
Robustness and other results
---most main results robust
---However, the interpretations of the evolution of some other state traits—such as the violent
crime rate—were sensitive to whether or not other closely related state traits—such as
spending on prisons—were included in the model.
Conclusion
---Results of the analysis suggest that some states recorded a substantial deterioration in
estimated quality-of-life over the 1980s, in large part due to limited infrastructure investment in
the wake of rapid growth. Estimates from our model suggest that reduced spending on
highways, increased traffic congestion, and elevated air pollution have been the most important
contributors to the deterioration in the quality-of-life in those states.
10. Brickman & Coates – Lottery Winners and Accident Victims: Is Happiness Relative?
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Adaptation level theory suggests that both contrast and habituation will operate to prevent the
winning of a fortune from elevating happiness as much as might be expected.
Is Happiness Relative?
---Brickman (1975) predicted this result from the fact that in the first case, individuals would
enhance the relative value of their own outcome by comparing it with the less fortunate other.
---limits of the proposition that happiness is relative: never been tested.
---The most general principle of adaptation level theory is that people’s judgments of current
levels of stimulation depend upon whether this stimulation exceeds or falls short of the level of
stimulation to which their previous history has accustomed them. Adaptation level theory offers
two general reasons for believing that recipients of an extreme stroke of good fortune will not
be generally happier than persons who have not been dealt such good fortune. The first is
contrast. The second is habituation.
Contrast and Habituation
---Experiences that are salient or extreme and simultaneously relevant to other experiences
serve as heavily weighted inputs for adaptation level.
 Thus, while winning $1 million can make new pleasures available, it may also make old
pleasures seems less enjoyable. That new pleasures are offset by the compensatory less of
old ones should in turn mitigate against any general gain in happiness by lottery winners.
---The second limit to good fortune is habituation. Eventually, the thrill of winning the lottery
will itself wear off.
---In sum, the effects of an extreme stroke of good fortune should be weakened in the short run
by a contrast effect that lessens the pleasure found in mundane events and in the long run by a
process of habituation that erodes the impact of the good fortune itself. The same principles
hold in reverse for groups that suffer an extreme stroke of ill fortune, like accidental paralysis.
---Study 1: short interviews with three groups
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1) Lottery winners;
2) Paralyzed accident victims, and
3) Control.
---Study 2: whether Study 1’s results due to preexisting differences.
Study 1’s Results
---similar background; no significant differences.
---It is especially interesting to note that the two ratings are roughly symmetric around the
mean, with winning the lottery being about as positive as the accident is negative.
---Lottery winners and controls were not significantly different in their ratings of how happy
they were now, how happy they were before winning, and how happy they expected to be in a
couple of years.
Accident victims and controls were significantly different in their ratings of both past
happiness and present happiness, but not future happiness.
---Winners saw change as a more important cause of their outcome than did victims. On the
other hand, a majority of the winners felt that they in some way deserved what happened.
Either because they saw the outcome as more a matter of change or because the outcome was
favorable, winners seemed less involved than victims with explaining why the outcome had
happened to them.
Study 2
---at least two major alternative explanations for the difference between lottery winners and
controls:
1) The difference is not an effect of the lottery but a general tendency for people who buy
lottery tickets to find less pleasure in their lives than people who do not buy tickets;
2) The second explanation is that the difference is not a result of past connections of
respondents to the lottery but of the degree to which the idea of winning the lottery was
made salient in the interview itself.
---purpose of Study 2:
1) To assess any general differences that might exist between people who bought or did not
buy lottery tickets;
2) To assess the effects of mentioning the lottery in the interview on respondents’ self-ratings.
Study 2’s Results
---Buyers and nonbuyers shared fairly similar background characteristics; no significant
differences between these groups on any of these background measures.
---Buyers and nonbuyers quite similar in how happy they felt.
---These results suggest that among the kind of people who were included in the initial study,
whether they played the lottery had little relationship to the satisfaction they reported. The
results obtained in that study were therefore probably not due to more nonplayers among the
controls.
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---Merely introducing the lottery as a context for the interview had no impact on participants’
views of the ordinary pleasures they considered and did not consistently raise or lower reported
happiness. In light of the available evidence, then, it seems unlikely that either the
buyer/nonbuyer differences between the groups or the different cover stories can explain the
results obtained in Study 1.
Discussion
---limitation: data obtained at a single point in time.
 A larger study, preferably longitudinal, is needed to specify the exact parameters that
determine how adaptation level effects change over time.
---A general alternative explanation to adaptation level theory for the decreased satisfaction of
the lottery winners is that good luck in a lottery may actually be more painful than pleasurable.
---A second possibility is that lottery winners reported less pleasure in everyday events in order
to appear modest and minimize the importance of their success, as subjects have sometimes
been found to do after laboratory success.
---Finally, it is always possible that winning the lottery changed the perspective people have on
everyday events without changing the actual pleasure they received from these events.
 The variable perspective model of Ostrom and Upshaw (1968)
The lower pleasure ratings of the winners and higher past-happiness scores of the victims
are probably therefore due to the contrast with their previous extreme experiences rather
than to alterations in their subjective scales.
---Through overlooking compensatory contrast effects, we overestimate the overall magnitude
and generality of the positive or negative feeling generated by an event.
Through overlooking habituation effects, we overestimate the general duration of feeling
generated by an event.
Perhaps because observers see the momentary elation or despair of an actor as more
extreme and more enduring than it is, they make inferences about the actor’s disposition that
the actor finds quite unwarranted.
 “pathetic fallacy” in observers: who see actors as more distressed by their misfortune than
the actors see themselves.
---If observers overestimate the extent to which winning a lottery or being crippled affects the
psychological state of participants, this fact itself can have serious consequences. Others may
cut off interaction with participants, either to avoid potentially embarrassing social comparison
or simply to avoid having to respond to what they expect are extremes of happiness or despair.
This tendency for others to reduce interaction can in turn make it harder on people who have
experienced such extreme events to evolve a new adaptation to their social environment.
11. Weinstein – Unrealistic Optimism About Future Life Events
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Cognitive and motivational considerations led to predictions that degree of desirability,
perceived probability, personal experience, perceived controllability, and stereotype salience
would influence the amount of optimistic bias evoked by different events.
Popular belief: invulnerability  unrealistic optimism.
Principal goal:
Test the hypotheses that
1. People believe that negative events are less likely to happen to them than to others, and
they believe that positive events are more likely to happen to them than to others.
2. Among negative events, the more undesirable the event, the stronger the tendency to
believe that one’s own chances are less than average; among positive events, the more
desirable the event, the stronger the tendency to believe that one’s own changes are
greater than average.
---unrealistically optimistic  lack certain information
---comparative risk assessments  difficulty in adopting the perspectives of others
3. The greater the perceived probability of an event, the stronger the tendency for people to
believe that their own chances are greater than average.
4. Previous personal experience with an event increases the likelihood that people will believe
their own changes are greater than average.
---motivational/cognitive viewpoint  people generally bringing to mind actions that
facilitate rather than impede goal attainment
5. The greater the perceived controllability of a negative event, the greater the tendency for
people to believe that their own changes are less than average; the greater the perceived
controllability of a positive event, the greater the tendency for people to believe that their
own chances are greater than average.
---Representativeness denotes the process of judging the probability that an individual fits
into a particular category by examining the degree to which the individual displays a few
salient features of category members but ignoring base rates for the categories.
6. When a stereotype exists of a particular type of person to whom a negative event is likely to
happen, people will tend to believe that their own changes are less than average. (No clear
prediction about the effects of stereotype salience on expectations for positive events.)
Study 1’s goal: to determine the amount of unrealistic optimism associated with different
events and to relate this optimism to the characteristics of the events.
Study 1
---The ratings of event characteristics showed that a clear differentiation between positive and
negative events was achieved.
---Hypothesis 1 strongly supported
---Event type has a powerful effect independent of the effects of the other event characteristics.
---All of the correlations predicted by Hypotheses 2-6 were in the predicted direction and that
all of the event characteristic terms were statistically significant.
---For positive events, perceived probability and degree of desirability were significantly
correlated with the amount of optimistic bias; for negative events, the correlations with
stereotype salience, perceived controllability, and personal experience were significant.
Study 1’s Discussion
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---For negative events, optimism, perceived controllability, and stereotype salience were all
strongly intercorrelated.
---The finding that optimism was not greater among the positive events judged to be
controllable or found to be associated with a stereotypic, high-chance group may simply reflect
that fact that many subjects were not attempting to control (i.e., influence) these events. This
same explanation may account for the strong correlation for positive events between perceived
probability and comparative judgments.
---Thus, for both positive and negative events, an optimistic bias appears to result when two
conditions are satisfied:
First, the event is perceived to be controllable, so that there are things one can do or
contemplate doing to influence the event.
Second, people have some degree of commitment or emotional investment in the outcome.
Under these conditions, optimism arises because people compare themselves with an
inappropriate standard: a person who does little or nothing to improve his or her prospects.
---Contrary to expectations based on a motivational interpretation of optimism, degree of
desirability had no appreciable effect on the size of the optimistic bias for negative events.
Study 2
---Previously it was suggested that people may be optimistically biased because their image of
other people is inaccurate or incomplete. Aware of the factors that improve their own chances
of achieving desirable outcomes, they may realize that others may have just as many factors in
their favor.
Study 2’s Results and Discussion
---the warning manipulation main effects & interactions: not significant.
---Group * Effect Set interaction for both negative and positive events: statistically significant.
 The experimental treatments did change the responses of the experimental groups.
---Comparisons among the covariance adjusted negative events means indicated that the
experimental group was significantly less optimistic than the two control groups, and that the
control groups did not differ from one another.
---The negative event results provide support for the proposition that people tend to use an
inaccurate image of others when making comparative judgments.
In the case of positive events, however, just asking subjects to list the factors that influence
their own chances decreased their optimism, and providing information about others had no
additional effect. This second finding suggests that people’s first thoughts about their future
may be more optimistic than their later, more reflective conclusions.
---more persistent source of optimism
---preponderance of favorable reasons
This close correspondence between the degree of optimism reported and the number of
favorable and unfavorable reasons listed—both across events and between subjects within
events—reinforces the suggestion that the generation of similar mental lists forms an
important stage in the process of deciding whether one’s own chances differ from average.
---Individual students who regarded a negative event as particularly undesirable were slightly
more optimistic about avoiding it than students who did not think that the event was so
undesirable.
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General Discussion
---an optimistic bias concerning many future life events
---Providing information about the attributes and actions of others reduced the optimistic bias
for negative events but did not eliminate it.
---The results suggest a mechanism that may partly explain these optimistically biased
expectations. In comparing their chances with those of their classmates, it appears that students
brought to mind any personal actions, plans, or attributes that might affect their chances of
experiencing the events. If an event was one they perceived to be controllable and if they were
committed to a particular outcome, the majority of factors they brought to mind were ones that
increased the likelihood that it would turn out the way they would like. Comparing themselves
to an unrealistic stereotype of a person who does nothing to improve his or her chances or even
engages in counterproductive activity, students concluded that their own prospects were better
than average.
Yet there seems to be more to unrealistic optimism that just an inappropriate comparison
group or a possible bias in the recall of relevant actions, plans, and attributes.
12. Schkade & Kahneman – Does Living in California Make People Happy? A Focusing
Illusion in Judgments of Life Satisfaction
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Climate-related aspects were rated as more important for someone living in another region than
for someone in one’s own region. Mediation analyses showed that satisfaction with climate
and with cultural opportunities accounted for the higher overall life satisfaction predicted for
Californians. Judgments of life satisfaction in a different location are susceptible to a focusing
illusion: Easily observed and distinctive differences between locations are given more weight
in such judgments than they will have in reality.
In general, the correlations between various aspects of subjective well-being and objective life
circumstances tend to be surprisingly low. In contrast, stable temperamental factors predict
subjective well-being with substantial accuracy.
Headey and Wearing (1992): affective set point
Focusing illusion:
When a judgment about an entire object or category is made with attention focused on a subset
of that category, a focusing illusion is likely to occur, whereby the attended subset is
overweighted relative to the unatteneded subset. In particular, when attention is drawn to the
possibility of a change in any significant aspect of life, the perceived effect of this change on
well-being is likely to be exaggerated.
2 hypotheses:
The mismatch in the allocation of attention will cause the judge to exaggerate the impact of
these circumstances on the subject.
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Our hypotheses were (a) that there would be no significant difference between residents of the
two regions in reported overall life satisfaction and (b) that judgments made by residents of
both regions would reflect a belief that “someone like them” would be more satisfied in
California than in the Midwest. The results confirmed both hypotheses.
METHOD
---The instructions for the other condition were designed to encourage the respondents to
imagine how they would feel at another school, without dwelling on specific facts about their
life, such as the residence of their parents or the requirement to pay nonresident university
fees.
RESULTS
---These was general agreement on relative importance: Job prospects, academic opportunities,
financial situation, safety, and social life were considered most important to overall life
satisfaction; variables associated with climate and cultural opportunities were less important, on
average.
---There was no difference in self-reported overall life satisfaction between the two regions. The
similarity of overall life satisfaction in the two regions is remarkable because satisfaction with
several aspects of life shows significant differences, all favoring California.
---Indeed, the failure of the priming manipulation in the present experiment suggests that
people do not think of climate in evaluating their life satisfaction even when they are mildly
prompted to do so.
---The most striking difference between Column 1 and 3 is that self-reported overall life
satisfaction is substantially higher than what is predicted for a similar individual in another
location. This difference could be an instance of the well-established optimistic bias.
Respondents generally expect their own fate to be better than the life of similar others.
However, this bias does not appear consistently in specific aspects of life, for which the results
are mixed.
---The main goal of the study was to examine whether the effects of region on ratings differed
between the self and other conditions.
---Although self-reported life satisfaction did not differ for respondents in the two regions,
respondents in both regions predicted higher overall satisfaction for a Californian than for a
Midwesterner. This pattern of results confirms our main hypothesis, that the prediction task
would reveal an incorrect belief that overall satisfaction with life is higher in California than in
the Midwest. Respondents who imagined life in another region correctly anticipated many of
the differences in satisfaction with individual aspects of life—especially climate. What they
failed to appreciate is that these satisfactions do not loom large in people’s overall
evaluations of their lives. Easily observable aspects of life that distinguish the two regions are
therefore assigned too much weight when people imagine life in a different place. This
discrepancy is a special case of the more general bias that we have labeled the focusing illusion.
It is apparent in Table 1 that the two regions differ most in satisfaction with aspects of life rated
as relatively unimportant, in both the self and the other conditions. Furthermore, it appears that
the advantages of California are often overestimated, and that some advantages are perceived
even where none exist. Some of these results may be influenced by a halo effect in the
judgments made in the other condition. Alternatively, they may reflect genuine beliefs about
the inferiority of life in the Midwest.

---Results confirmed our hypothesis: Respondents in the different-region condition rated
climate as more important than those in the same-region condition…… A similar effect was
found for cultural opportunities, which is apparently another variable on which respondents
perceived a clear difference between regions. Thinking of the life satisfaction of someone in a
different region apparently increased the perceived importance of these distinctive aspects,
without decreasing the perceived importance of other aspects of life.
---hypothesis:
If rating someone in another region induces a focus on salient differences, we should expect
these differences to account for the disparity between similar others in California and the
Midwest in predicted overall satisfaction.
 Mediation analysis:
This analysis confirms the role of easily observed differences between regions, such as
climate and cultural opportunities, as key determinants of the greater satisfaction predicted
in California.
DISCUSSION
---Contrary to the intuitions of our respondents, the advantages of life in California were not
reflected in differences in the self-reported overall life satisfaction of those who live there.
---The focusing illusion is not restricted to the context of life satisfaction. The psychological
explanation of the illusion is that it is difficult or impossible to simultaneously allocate
appropriate weights to considerations that are at the focus of attention and to considerations
that are currently in the background.
e.g., fault-tree effect, unpacking effect.
---A related observation from research in decision making is that people normally evaluate
outcomes as changes, not as states.
---In the context of life satisfaction, the present discussion suggests that people may not be
good judges of the effect of changing circumstances on their own life satisfaction, or on that of
others. Our research suggests a moral, and a warning: Nothing that you focus on will make as
much difference as you think.
13. Easterlin – Does Economic Growth Improve the Human Lot? Some Empirical Evidence



Happiness corresponds to the broader of these two concepts, that of social welfare, or welfare
at large.
Central concern of this paper:
Is there evidence that economic growth is positively associated with social welfare, i.e., human
happiness?
1. The Concept and Measurement of Happiness
---2 types of data:
1) Responses to a Gallup-poll type survey
 Broad categories of happiness
2) Cantril (1965): “Self-Anchoring Striving Scale”
 A numerical rating from 0 to 10
 The technique thus yields a rating by each individual of his personal standing on a scale from
0 (the worst possible life) to 10 (the best possible life), where “worst” and “best” are
defined by each person for himself.
Reliance is placed on the subjective evaluation of the respondent—in effect, each individual is
considered to be the best judge of his own feelings.
---appeals:
1) Subjective vs. outside observers
2) Possible to make meaningful comparisons
---reservations:
1) Relevance of the happiness concept to populations differing widely in cultural
characteristics.
---measurement problems:


1) Emotional state: variable?
 Stable test-retest reliabilities
2) Validity of self-reports on happiness: Are people capable of assessing their own emotional
states?
3) A tendency toward an upward bias in the replies due to considerations of social desirability.
4) Universality of the norm.
5) The context in which the happiness question is asked.
e.g., usually question asking about economic status comes at the end of the survey.
6) The effect of variations in the wording of the happiness question.
2. Evidence
---a. Within-Country Comparison  shows an association between income and happiness
***In every single survey, those in the highest status group were happier, on the average,
than those in the lowest status group.
“good reason to challenge the image of the ‘carefree but happy poor’”
***In addition to classification by income level, data on happiness are sometimes available by
characteristics such as sex, age, race, education, and marital status.
However: emotional states noticeably absent.
***”On the whole, I am inclined to interpret the data as primarily showing a causal
connection running from income to happiness.”
---b. International Comparisons (much weaker associations)
***The happiness differences between rich and poor countries that one might expect on the
basis of the within-country differences by economic status are not borne out by the
international data.
---c. National Time Series (much weak associations)
The NORC polls’ results confirmed those shown by the AIRO polls—a decline in happiness
between the late 1950s and mid-1960s.
3. Interpretation
---a. Theory

***Duesenberry’s “relative income” explanation of the celebrated United States incomesavings paradox
***A classical example of the fallacy of composition would apply: An increase in the income of
any one individual would increase his happiness, but increasing the income of everyone would
leave happiness unchanged. Similarly, among countries, a richer country would not necessarily
be a happier country.
***Despite peer group influences, there is a “consumption norm” which exists in a given
society at a given time, and which enters into the reference standard of virtually everyone. This
provides a common point of reference in self-appraisals of well-being, leading those below the
norm to feel less happy and those above the norm, more happy.
***other explanations: external diseconomies of production; power.
---b. Evidence for a “Relative Income” Interpretation
***other empirical support for “relativity” as the chief reason: saving behavior, fertility
behavior, and labor force participation.
***”relative deprivation”
***historical changes
***”People in highly developed nations have obviously acquired a wide range of aspirations,
sophisticated and expensive from the point of view of people in less-developed areas, who have
not yet learned all that is potentially available to people in more advanced societies and whose
aspirations concerning the social and material aspects of life are modest indeed by comparison.”
***Material aspirations or tastes vary positively with the level of economic development.
Moreover, these changes in tastes are caused by the process of income growth itself (though
the cause-effect relation may run both ways). As a result of secular income growth, the
socialization experience of each generation embodies a higher level of living and
correspondingly generates a higher level of consumption standards. Even within the life cycle of
a given generation, the progressive accretion of household goods due to economic growth
causes a continuous upward pressure on consumption norms. This upward shift in standards
(tastes) tens to offset the positive effect of income growth on well-being that one would expect
on the basis of economic theory.
4. Summary and Concluding Observations
---The happiness differences between rich and poor countries that one might expect on the
basis of the within-country differences by economic status are not borne out by the
international data. Similarly, in the one national time series studied, that for the United States
since 1946, higher income was not systematically accompanied by greater happiness.
---In judging their happiness, people tend to compare their actual situation with a reference
standard or norm, derived from their prior and ongoing social experience.
---While norms vary among individuals within a given society, they also contain similar features
because of the common experiences people share as members of the same society and culture.
Thus, while the goods aspirations of higher status people probably exceed those of lower status
people, the dispersion in reference norms is less than in the actual incomes of rich and poor.
 Adaptability of mankind
---The only sure conclusion is that we need much more research on the nature and causes of
human welfare.
The present analysis also points to a clear need for research on the formation of preferences
or tastes.
---international demonstration effect: no; internal demonstration effect: yes.
---the relation of economic changes to political behavior
---growth economics: the most developed economies  era of satiation?
An antimaterialistic cultural revolution may be in the making, but it seems dubious that a
major cause is an unprecedented affluence which American society has recently attained. If the
view suggested here has merit, economic growth does not raise a society to some ultimate state
of plenty. Rather, the growth process itself engenders ever-growing wants that lead it ever
onward.
14. Deaton – Income, Health, and Well-Being around the World: Evidence from the Gallup
World Poll







Layard (2005): life satisfaction surveys  measures of individual and aggregate happiness
Sen (1999): human well-being  a range of functions & capabilities
The main source of previous empirical evidence on life satisfaction in countries around the
world is the World Values Survey, which is conducted by a network of academics around the
world who coordinate their efforts…… The World Values Survey has been carried out in four
waves: 1981, 1990-1991, 1995-1996, and 1999-2001.
Several of the studies based on the World Values Survey data have concluded that high-income
countries are happier than low-income countries, but that among the high-income countries,
there is no relationship between national income and national happiness.
2006: Gallup World Poll
same questionnaire in all countries  cross-country comparisons
“Life satisfaction” and “happiness” are not synonymous.
The analysis of the Gallup World Poll in this paper confirms a number of earlier findings and
also yields some new and different results. For example, high-income countries have greater
life satisfaction than low-income countries, and when income is measured in logarithmic terms,
there is no evidence that the cross-country effects of greater income fade out or vanish as
countries increase their income. Conditional on the level of national per capita income, the
effects of economic growth on life satisfaction are negative, not positive as would be predicted
by previous discussion and previous micro-based empirical evidence. Neither life satisfaction nor
health satisfaction respond strongly to objective measures of health, such as life expectancy or
the prevalence of HIV infection, so that neither provides reliable indicator of population wellbeing over all domains, or even over health.
Life Satisfaction and Income: Evidence from the World Poll
---Figure 1 & 2: It is not true that there is some critical level of GDP per capita above which
income has no further effect on life satisfaction.
 Close to a linear relationship
---WVS vs. Gallup:
***both positive relationship between life satisfaction and GDP per head, relationship
steeper among the poor countries;
***however: little increase in life satisfaction above about $10,000 per capita (WVS).
 Reasons:
1) WVS includes very few of the poorest countries.
2) A substantial number of the poorest countries in the WVS are in Eastern Europe or were
once part of the Soviet Union.
3) Mostly literate and urban samples.
Results: a mixture of unusually dissatisfied people from Eastern Europe and the former
Soviet Union, and unusually satisfied people from a small group of poorer countries; a
vertical relationship capped by a flat one.


---negative effect of economic growth on life satisfaction:
However we count it, income makes countries more satisfied with their lives and income
growth makes them less satisfied.
---HIV prevalence rate: does not attract statistically or economically significant coefficient.
---decline of life satisfaction with age: largest among the middle-income countries.
---For each of the age groups, the level of national income is an important positive determinant
of life satisfaction, and the rate of growth of income a negative determinant.
Health Satisfaction and Health Systems
---People are more likely to be satisfied with their health in high-income countries, and that
they become less satisfied with their health as they age.
As we might expect for health, the effects of age are much larger than the effects of national
income. Remarkably, the rate at which health satisfaction deteriorates with age is greater in
low- and middle-income countries than in high-income countries, where income seems to
provide some protection against the effects of aging on self-perceived health.
---If we repeat the regressions of average life satisfaction in Table 2, adding health satisfaction
as another explanatory variable, the health satisfaction variable has a large (close to 4) and
statistically significant coefficient. Moreover, with this variable added, the coefficients on life
expectancy, the change in life expectancy, and the rate of economic growth lose their
significance. While such regressions are useful for understanding the life satisfaction responses
(though one might just as well argue for regressing health satisfaction on life satisfaction), they
are less useful for deciphering the relationship between the satisfaction reports and the
objective circumstances of life.
Discussion
---“According to this view, average national life satisfaction will be a useful measure in the cross
section, but not over time.”
---Conditional on income, longer life expectancy has no apparent effect on life satisfaction.
Instead, it is changes in the expectation of life that seem to have an effect, no matter whether
life expectancy is high or low.
---In spite of the positive relationship between life satisfaction and national income, and in spite
of the plausibility of dissatisfaction with life and health in the countries of eastern Europe,
neither life satisfaction nor health satisfaction can be taken as reliable indicators of population
well-being, if only because neither adequately reflects objective conditions of health.
15. Di Tella & MacCulloch & Oswald – The Macroeconomics of Happiness

1. Abstract:
“We show that macroeconomic movements have strong effects on the happiness of nations. First,
we find that there are clear microeconomic patterns in the psychological well-being levels of a
quarter of a million randomly sampled Europeans and Americans from the 1970s to the 1990s.
Happiness equations are monotonically increasing in income, and have similar structure in different
countries. Second, movements in reported well-being are correlated with changes in
macroeconomic variables such as gross domestic product. This holds true after controlling for the
personal characteristics of respondents, country fixed effects, year dummies, and country-specific
time trends. Third, the paper establishes that recessions create psychic losses that extend beyond
the fall in GDP and rise in the number of people unemployed. These losses are large. Fourth, the
welfare state appears to be a compensating force: higher unemployment benefits are associated
with higher national well-being.

2. Introduction:
---different approach: international data on the reported individual well-being levels.
---disagreement among economists about the seriousness of the effects of aggregate economic
fluctuations:
1) Keynesians: recessions  expensive disruptions to the economic organization of society;
2) Real-business-cycle theorists: Keynesians overestimating costs, attention to economic growth.
---regularity (A large set of personal characteristics has approximately the same influence on
reported happiness.) of happiness data: potentially containing interesting information.

3. Conceptual Issues:
---two conceptual concerns:
1) Untrended nature of reported happiness;
2) Variables such as GDP per capita, unemployment, and inflation are not exogenous.
---main data source: Eurobarometer Survey series, United States’ General Social Survey.

4. The Effect of GDP on Happiness:
---first hypothesis: whether macroeconomic movements feed through into people’s feelings of wellbeing.
---There is evidence of a positive and well-determined effect of GDP per capita on individuals’
perceived well-being.
---“We draw the conclusion that there is evidence in these data for the existence of both level and
change effects on nations’ happiness. First, consistent with standard economic theory, it appears
that well-being is robustly correlated, in a variety of settings, with the current GDP…… Second,
reported well-being is also correlated with growth in GDP, and this result is consistent with
adaptation theories in which the benefits of real income wear off over time. Finally, lagged levels of
GDP are statistically significant in certain specifications.”

5. Costs of Recessions:
“The large well-being cost of losing a job shows why a rise in a nations’ unemployment might
frighten workers. Becoming unemployed is much worse than is implied by the drop in income alone.
The economist’s standard method of judging the disutility from being laid off focuses on pecuniary
losses. According to our calculations, that is a mistake, because it understates the full well-being
costs, which, according to the data, appear to be predominantly nonpecuniary.”

6. Conclusions:
---Macroeconomics matters. People’s happiness answers en masse are strongly correlated with
movements in current and lagged GDP per capita. This is the main finding of the paper.
---Is it the level or change in GDP that influences well-being? After an examination of a range of
specifications, we conclude that there is statistical support for both kinds of channels. The
persuasive evidence for a change-in-GDP effect upon a country’s happiness is consistent with
theories of adaptation. It seems likely, therefore, the source of the well-being gains from extra
national income wear off over time. Our conjecture is that there are strong habituation effects, so
that human beings get used to a rise in national income, but that not all of the benefits of riches
dissipate over time. Future research, with longer runs of data, will have to revisit that conjecture.
16. Kahneman & Deaton – High Income Improves Evaluation of Life but Not Emotional
Well-Being
“Recent research has begun to distinguish two aspects of subjective well-being. Emotional well-being
refers to the emotional quality of an individual’s everyday experience—the frequency and intensity of
experiences of joy, stress, sadness, anger, and affection that make one’s life pleasant or unpleasant. Life
evaluation refers to the thoughts that people have about their life when they think about it. We raise
the question of whether money buys happiness, separately for these two aspects of well-being. We
report an analysis of more than 450,000 responses to the Gallup-Healthways Well-Being Index, a daily
survey of 1,000 U.S. residents conducted by the Gallup Organization. We find that emotional well-being
(measured by questions about emotional experiences yesterday) and life evaluation (measured by
Cantril’s Self-Anchoring Scale) have different correlates. Income and education are more closely related
to life evaluation, but health, care giving, loneliness, and smoking are relatively stronger predictors of
daily emotions. When plotted against log income, life evaluation rises steadily. Emotional well-being also
rises with log income, but there is no further progress beyond an annual income of ~$75,000. Low
income exacerbates the emotional pain associated with such misfortune as divorce, ill health, and being
alone. We conclude that high income buys life satisfaction but not happiness, and that low income is
associated both with low life evaluation and low emotional well-being.”
“When entered in multiple regression model to predict well-being along with other aspect of life
circumstances (marital status, age, education), the effects of household income are almost invariably
both statistically significant and quantitatively important. We report that household income matters for
both emotional well-being and life evaluation, and that there are circumstances under which it matters
for the latter when it does not matter for the former.”

1. Results:
---U.S.: relatively high on life evaluation but also very stressed.
“We conclude that lack of money brings both emotional misery and low life evaluation; similar
results were found for anger. Beyond ~$75,000 in the contemporary United States, however, higher
income is neither the road to experienced happiness nor the road to the relief of unhappiness or
stress, although higher income continues to improve individuals’ life evaluations.”

2. Discussion:
“We observe a qualitative difference between our measures of emotional well-being and of life
evaluation—the former satiates with high income, whereas the latter dos not. This observation
underscores the importance of the distinction between the judgments individuals make when they
think about their life and the feelings that they experience as they live it. As might be expected, the
former is sensitive to socioeconomic status, whereas the latter is sensitive to circumstances that
evoke positive or negative emotions, such as spending time with others and caring for a sick
relative.”
“Several authors have commented on a related difference between two questions that are often
used in surveys of subjective well-being: ‘How satisfied are you with your life?’ and ‘How happy are
you these days?’ The common conclusion is that income is more strongly related to satisfaction than
to happiness, but the difference that we found in the present study is unusually sharp. We speculate
that the Cantril ladder of life is a purer measure of life evaluation than the life satisfaction question,
which has an emotional aspect, and that the reports of the emotions of yesterday provide a purer
measure of emotional well-being than the standard happiness question. If both aspects of subjective
well-being are considered important, then the separation of the measures is an advantage.”
17. Stevenson & Wolfers – Subjective Well-Being and Income: Is There Any Evidence of
Satiation?
---Easterlin paradox  a robust positive relationship between well-being and income across countries
and over time.
 A modified version:
Acknowledging the existence of a link between income and well-being among those whose
basis needs have not been met, but claiming that beyond a certain income threshold,
further income is unrelated to well-being. (existence of such as SATIATION POINT)
---The income level beyond which further income no longer yields greater well-being is typically said to
be somewhere between $8,000 and $25,000.
---2 versions of the modified-Easterlin hypothesis:
1) Stronger version: beyond some level of basis needs, income is uncorrelated with subjective wellbeing (𝛽𝑟𝑖𝑐ℎ = 0);
2) Weaker version: the well-being-income link estimated among the poor differs from that found
among the rich (𝛽𝑟𝑖𝑐ℎ > 𝛽𝑝𝑜𝑜𝑟 ).
---data: focus on the cross-section relationships seen within and between countries.
---no evidence of a satiation point; well-being-income link: similar between the poor and the rich, robust
across a variety of datasets.

1. Cross-Country Comparisons:
---GDP: the World Bank’s World Development Indicators.
“The well-being-income relationship among poor nations appears to extend roughly equally among
rich nations.”
---data from the Gallup World Poll: reject both the weak and strong versions of the modifiedEasterlin hypothesis. (World Values Survey data: parallel results, albeit with less statistical power)
---2 other datasets: the Pew Global Attitudes Studies, the International Social Survey Program: each
strongly rejects the null that 𝛽𝑟𝑖𝑐ℎ = 0. Moreover, to the extent that the well-being-income
relationship changes, it appears stronger for rich countries.
“All told, comparisons of average levels of subjective well-being and GDP per capita across countries
suggest that the well-being-income relationship observed among poor countries holds in at least
equal measure among rich countries. In the few cases where we cannot reject 𝛽𝑟𝑖𝑐ℎ = 0, we also
cannot reject 𝛽𝑟𝑖𝑐ℎ = 𝛽𝑝𝑜𝑜𝑟 . Our larger datasets emphatically reject the weak and strong forms of
the modified-Easterlin hypothesis, while the smaller samples are sufficiently imprecise as to provide
no statistically significant evidence in support of (or against) it.”

2. Within-Country Cross-Sectional Comparisons:
“In our analysis of that same dataset we used data from all years, but even with these large samples
could not reject the null that proportional increases in income continue to yield the same increase in
happiness at higher income levels.”
“While there are differences in the location of these non-parametric fits, and even some differences
in the slopes, the more remarkable feature is simply that for every country the relationship
estimated at low incomes appears to hold in roughly equal measure at higher incomes. In particular,
there is no evidence that the slop flattens out beyond any particular ‘satiation point’ in any nation.”
“The strong form of modified-Easterlin hypothesis suggests that the well-being-income gradient is
zero for the rich part of the sample, suggesting that the data should cluster along the horizontal axis.
The weaker form of this hypothesis suggests a sharp break in this gradient among the ‘rich,’ and
hence that most country-level estimates will lie beneath the 45-degree line. In fact, we find 61
nations above this line, and only 37 below.”

3. Conclusions:
“While the idea that there is some critical level of income beyond which income no longer impacts
well-being is intuitively appealing, it is at odds with the data. As we have shown, there is no major
well-being dataset that supports this commonly-made claim. To be clear, our analysis in this paper
has been confined to the sorts of evaluative measures of life satisfaction and happiness that have
been the focus of proponents of the (modified) Easterlin hypothesis.”
18. Heffetz & Frank – Preferences for Status: Evidence and Economic Implications

1. Introduction:
---rational choice theory  ultimate objects of desire: individually consumed goods (and leisure).
---main goal: review the growing body of evidence that bears on the hypothesis that people care
about status; second goal: summarize briefly the economic implications of status seeking.

2. Features of Status:
---Positionality: status as a positional good– “those things whose value depends relatively strongly
on how they compare with things owned by others.”
---one immediate consequence of the positionality of status: its consumption imposes negative
externalities: an increase in someone’s relative status automatically translate to a decrease in the
relative status of (at least some) others in the relevant reference group.
---a direct implication: status goods are over-consumed and hence, as is typical in such cases, policy
interventions that solve the dilemma could be Pareto improving.
---Desirability: Status may be viewed—and desired—merely as an intermediate good. According to
this view, status acts as a non-monetary currency.
---“Because of these social rewards, each individual seeks to increase his social status through group
affiliation, investments in assets (including human and social capital) and an appropriate choice of
actions.”
---status: could be valued as a signal.
---“Is status then desirable in and of itself, or is it only desired as a means (a currency, a signal, etc.)
to achieving other resources?”
---Non-Tradability: Status is conferred by society, and cannot be directly purchased in an explicit
market for status. In other words, it is non-tradable. Depending on context, an individual’s ability to
gain status may be severely limited (for example, when status is hereditary) or less so (for example,
when status depends on effort at the workplace). To the extent that one’s actions have any effect
on one’s status, however, these actions have to affect the social perceptions through which status is
conferred. In other words, status-seeking activities must be socially visible (either directly or through
their socially visible outcomes).
---the existence of implicit markets for status: a firm with a different wage distribution, a different
neighborhood.

3. Evidence:
“If individuals had preferences for status, and status in turn were conferred on the basis of an
individuals’ economic outcomes such as income, wealth, consumption, etc., then such outcomes (or
their combinations) would have to enter the utility function positionality. That is, not only would
absolute income and wealth matter, but so too would relative income and relative wealth.”
---three stylized facts:
1) Cross-section regressions (with or without demographic controls) within a country show a
significant income-happiness correlation, with a higher correlation in developing than in
developed countries;
2) Panel data that control for individual fixed effects show that changes in real incomes are
correlated with changes in happiness, with exogenous income variations showing causal effects
on happiness (again with larger coefficients in transition than in developed economies); and
3) Large samples of cross-time cross-country data show that happiness moves with
macroeconomic measures like GDP, growth, and inflation.
“A growing body of experimental evidence has shed light on the question of whether status is
desirable as a means or as an end. Much of this work has focused on demonstrating that status (or
status perceptions) can affect economic outcomes, hence demonstrating that status could be
desired merely as a means to improved economic outcomes. At the same time, new work attempts
to measure directly the extent to which individuals forgo real resources to gain status in a lab
context. This work suggests that status may be desired even when it does not result in any economic
benefits.”
“Under which circumstances may an individual perceive status as a means or as an end? One might
reasonably hypothesize that both mechanisms are at work simultaneously all the time. Which one is
more important at any given point probably depends strongly on the situation: for example, the size
of the rationally recognizable rewards and the salience and nature of the status symbol may
influence what is included in a decision to act. This topic would be highly relevant for understanding
when one can motivate people with incentives as opposed to emotions, but no theory currently
addresses this question; it requires further research.”
“The non-tradability of status—that it is conferred by society and cannot be directly purchased—
implies that the only way to obtain status is through actions that are socially visible (or that have
socially-visible consequences). Indeed, if we assume that status depends on actions, status-seeking
individuals are expected to change their behavior in predictable ways depending on whether their
actions are visible to others. The observation that they often do, however, is consistent not only
with preferences for status, but also with any preferences where others’ opinions are important
(e.g., because of considerations of reputation, shame, fear of punishment, etc.).”
---the Darwinian model:
According to Darwin, animal drives were selected for their capacity to motivate behaviors that
contribute to reproductive success. Reproductive success, in turn, is fundamentally about resource
acquisition: other things equal, the more resources an animal has, the more progeny it leaves
behind. What matters is not the absolute number of offspring an individual has, but rather how its
progeny compare in number with those of other individuals. A specific trait will thus be favored by
natural selection less because it facilitates resource acquisition in absolute terms than because it
confers an advantage in relative terms.
“The most general implications of preferences for status are straightforward: ‘If status if desirable,
individuals are willing to sacrifice consumption to obtain it’ (consumption here is interchangeable
with resources). Combing the desirability of status with the other two features of status highlighted
above—its positionality and its non-tradability—sharpens this statement. The positionality of status
implies that status seeking diverts resources away from welfare-enhancing uses, wasting them—
from the point of view of society as a whole—on efforts to win a zero-sum game. The nontradability of status implies that the resulting inefficiencies could be manifest in different (and
sometimes unexpected) markets, as they assume a role as implicit status markets.”
“These examples illustrate the familiar result that goods that impose negative externalities tend to
be over-consumed. Furthermore, with a utility function that has both a (standard) absolute and a
relative consumption components and it–as is standardly assumed—concave in absolute
consumption, the marginal utility from additional consumption through the absolute term
approaches zero as income rises. The relative component hence becomes increasingly important as
income rises. Status seeking, on this view, becomes increasingly important with economic growth.”

4. Labor Market Implications:
---positional concerns  labor market
---local rank at the workplace: distribution of wages within firms.
---managerial implications of status seeking: managers should view status as its own end.
---importance of non-monetary incentives
---workers: willing to replace some monetary income with direct status payments?

5. Conclusion:
---the potential of preferences for status to be an important driver of economic outcomes
19. Luttmer – Neighbors as Negatives: Relative Earnings and Well-Being
“This paper investigates whether individuals feel worse off when others around them earn more. In
other words, do people care about relative position, and does ‘lagging behind the Joneses’ diminish
well-being? To answer this question, I match individual-level data containing various indicators of wellbeing to information about local average earnings. I find that, controlling for an individual’s own income,
higher earnings of neighbors are associated with lower levels of self-reported happiness. The data’s
panel nature and rich set of measures of well-being and behavior indicate that this association is not
driven by selection or by changes in the way people define happiness. There is suggestive evidence that
the negative effect of increases in neighbors’ earnings on own well-being is most likely caused by
interpersonal preferences, that is, people having utility functions that depend on relative consumption
in addition to absolute consumption.”

1. Introduction:
“In particular, if utility depends on relative consumption, one person’s increase in consumption has
a negative externality on others because it lowers the relative consumption of others. In this case,
taxes that discourage consumption are not as distortionary as previously thought because they also
serve to internalize the negative externality of consumption on others. The distinction between
relative and absolute formulations of utility is also pertinent to the welfare implications of
residential sorting by income and to the debate about whether the poverty line should be absolute
(a fixed consumption basket) or relative (a fraction of mean or median income).”
---Easterlin: income and self-reported happiness are positively correlated across individuals within a
country but that average happiness within countries does not seem to rise over time as countries
become richer.  relative income matters for well-being.
This paper’s contributions:
1) It takes seriously the concern that living in an affluent area might affect one’s definition of
happiness even if it does not affect one’s true or experienced well-being;
2) The paper examines whether the inverse relationship between happiness and neighbors’
earnings might be spurious due to omitted individual or local characteristics;
3) The paper offers suggestive evidence concerning the mechanism mediating the negative
relationship between neighbors’ earnings and happiness. I find evidence that the results are
stronger for people who socialize more with neighbors but not for those who socialize more
with friends outside the neighborhood. The paper’s findings indicate that interpersonal
preferences that incorporate relative income concerns drive the negative association between
neighbors’ earnings and own well-being.
 2. Empirical Strategy:
---well-being = f(own income, average income in locality, controls)
---3 most serious threats to a causal interpretation of the coefficient on average income in locality:
1) The definition of happiness shifts:
 address this concern by using alternative outcome measures that have a relatively objective
definition (e.g., the frequency of marital disagreements about various topics);
2) Results driven by unobserved local area characteristics that are correlated with both average
local income and self-reported happiness:
 inclusion of state fixed effects,
 used a predicted measure of local earnings instead of actual local income,
 inclusions of local housing price measures as controls and controlling for an individual’s
predicted real income;
3) Results driven by omitted individual characteristics that influence both the decision where to
live and self-reported happiness:
 exploits the panel aspect of the NSFH data; inclusion of individual fixed effects.
 3. Data:
---data sources:
1) National Survey of Families and Households (19+, English/Spanish speaking households):
Main outcome variable: self-reported happiness;
2) Census and Current Population Survey:
PUMA (Public Use Microdata Area).
 4. Results:
“The first row shows that predicted PUMA earnings have a significantly negative effect on selfreported happiness. In other words, controlling for other factors, individuals living in richer areas
report being less happy. As expected, own household income has a positive effect on happiness but
its coefficient may be relatively small because the regression includes other proxies for income, such
as the value of one’s home and a dummy variable for renting. Usual working hours has an
insignificant negative effect, unemployment status has a large and significant negative effect, while
a dummy for being out of the labor force has a significant positive effect on happiness.”
---using depression/self-reported health: no significant relations.
“The regressions show that the effect of neighbors’ earnings is significantly stronger for those who
socialize more frequently with neighbors but not for those who socialize more frequently with
relatives, friends outside the neighborhood, or people they work with. These findings are consistent
with what one would expect if social comparisons with neighbors partly determine people’s
happiness.”

5. Conclusions:
“This paper shows that individuals’ self-reported happiness is negatively affected by the earnings of
others in their area. By looking at alternative outcome measures, such as frequency of marital
disagreements, I provide suggestive evidence that this finding is not simply on artifact of the way
people report happiness. I investigate the concern that the finding could be driven by omitted
variables, but find no evidence of selection in a number of specification tests. Though the
mechanism by which increases in neighbors’ earnings reduce happiness is hard to identify precisely,
I find that increased neighbors’ earnings have the strongest negative effect on happiness for those
who socialize more in their neighborhood. I conclude that the negative effect of neighbors’ earnings
on well-being is real and that it is most likely caused by a psychological externality, that is, people
having utility functions that depend on relative consumption in addition to absolute consumption.
The size of the effect is economically meaningful. An increase in neighbors’ earnings and a similarly
sized decrease in own income each have roughly about the same negative effect on well-being. This
suggests that an increase in own income leads to a negative externality on neighbors’ well-being
that is of the same order of magnitude as the positive effects on own well-being. Unless one
chooses to disallow these negative externalities on the ground that they appear to stem from an
interpersonal preference component that may be morally questionable, externalities of this size can
in principle substantially affect optimal income taxation, consumption taxation, and residential
sorting policies.”
20. Davis & Wu – Social Comparisons and Life Satisfaction Across Racial and Ethnic
Groups: The Effects of Status, Information and Solidarity

1. Abstract:
“This paper explores the role of within group social comparisons on the life satisfaction of different
racial and ethnic groups in the U.S. For Whites, we find that higher group income levels are
associated with lower levels of life satisfaction, a result that is consistent with a preference for
within group status. In contrast, life satisfaction is increasing in group income for Blacks. This result
is consistent with the existence of social norms that emphasize Black solidarity. It is also consistent
with an information effect in which Blacks rely on peer income levels to form expectations regarding
their future prospects. We introduce a theoretical framework to help to distinguish between
solidarity and information effects. Our empirical results provide strong support for the hypothesis
that solidarity rather than information accounts for the positive relationship between average Black
income and the subjective wellbeing of U.S. Blacks. Finally we consider two theories of social
solidarity and find support for social salience but not social density in determining the strength of
solidarity effects.”

2. Introduction:
“Our results suggest that group-specific social comparisons are important, in that an individual’s
self-reported level of life satisfaction depends on both group-specific and general social
comparisons, though in different ways for those in different groups.”
 White: a significant negative relationship between life satisfaction and average group
income; Hispanics & Asians: no consistent, statistically significant relationship; Blacks:
positive relationship.
---information effect (“tunnel effect”): “In particular, they view a positive comparison income effect
as evidence that individuals with imperfect information about their future income levels may
become more optimistic regarding their prospects when the economic situation of their peers
improves.”
---2 hypotheses:
1) Social salience hypothesis (supported by empirical evidence): group solidarity is stronger when
individuals are more frequently reminded of their distinctiveness, as happens when they
interact more often with individuals of a different race;
2) Social density hypothesis: racial solidarity is stronger where minority presence is greater.
 3. Average Group Income and Life Satisfaction:
“Consistent with the literature on the economics of happiness, we find that life satisfaction is
positively related to income, education, being married, and being employed. The data also exhibits
the broadly confirmed U-shape relationship between life satisfaction and age…… We see that the
relationships between life satisfaction and these variables are quite consistent across all groups,
though there are some notable exceptions.”
“Of particular interest for this study are the relationships between the reference income variables
and life satisfaction. In the regression that includes the entire sample, we see that the average
income of one’s racial or ethnic group is negatively related to happiness and significant at the 1%
level, confirming the salience of own-group social comparisons. In contrast, controlling for average
group income, the coefficient on average state income is not statistically significant, and much
smaller in absolute value. These results confirm the importance of own-group relative to global
social comparisons as determinants of happiness.”

4. Distinguishing Between Information and Solidarity Effects:
---(students & retirees) interaction terms  DO NOT support a large role for information effects.
---education: larger role in determining the effects of Black social comparisons.
---Whites: net effect of average group income on subjective wellbeing is negative for every
educational group; Blacks: the net effect is positive with a high school diploma or greater
educational attainment.
---the positive coefficient on average Black income  the effect of Black solidarity

5. Testing Theories of Group Solidarity:
---group solidarity: social salience vs. social density:
 Interact average group income with a group’s share of state population:
“-”: social salience hypothesis correct (significant at 1% level);
If the social salience hypothesis is correct, feelings of social solidarity should be stronger
among groups that are a smaller share of the population and to decline as a group’s
population share rises.
“+”: social density hypothesis correct.
---solidarity: plays a greater role in social comparisons for Blacks than for Whites.

6. Conclusions:
“In particular, for Whites we find that life satisfaction is decreasing in average group income, a result
that is consistent with a primary concern with intra-group status. In contrast, among Blacks we find
that life satisfaction increases in average group income. No significant relationship between group
income and happiness was found for Hispanics or Asians, perhaps because our data does not
identify the relevant comparison group.”
“Our results provide strong support for the existence of Black solidarity, but no support for the
existence of empirically significant information effects for Blacks. Finally, we present evidence that
feelings of social solidarity decrease with a group’s share of state population, a result that is broadly
consistent with the social salience theory of solidarity. Our findings suggest that solidarity effects
play a role in social comparisons for both Blacks and Whites, though they are strongest for Blacks.”
21. Blanchflower & Oswald – Is Well-Being U-Shaped over The Life Cycle?

1. Abstract:
---evidence  psychological well-being: U-shaped through life.
A difficulty with research on this issue: omitted cohort effect.

 The term cohort effect is used in social science to describe variations in the characteristics of
an area of study over time among individuals who are defined by some shared temporal
experience or common life experience, such as year of birth, or year of exposure to
radiation.
2. Introduction:
“This paper offers some of the first evidence that the curvilinear relationship is robust to cohort
effects.”
---500,000 Americans & Europeans, the General Social Surveys of the United States, and the
Eurobarometer Surveys.

3. Theoretical issues:
---Carstensen’s theory: age is associated with increasing motivation to derive emotional meaning
from life and decreasing motivation to expand one’s horizon.

4. Conclusions:
“This paper offers international evidence that well-being depends in a curvilinear way upon age.
Happiness is approximately U-shape through the life-course; mental distress tends to each a
maximum in middle age. Our regression equations allow for confounding influences—including
income, education and marriage—upon happiness and life satisfaction. The empirical findings
should thus be read as tracing out an age U-shape in ceteris paribus well-being. In some nations,
that U-shape holds in raw data; in other countries it is necessary to use multiple regression
methods.”
“The paper results, which draw upon ordered logit regression equations, and use data sets long
enough to distinguish age effects from cohort effects, suggest that the convex structure of the curve
is fairly similar across different parts of the world.”
“Do cohort effects matter? Our correction for birth-cohort influences makes some difference to the
results claimed in the earlier literature, especially in American well-being equations, but the broad
spirit of a U-shape seems to be unaffected by cohort influences. On these estimates, happiness
among American males and females reaches a minimum in, respectively, approximately the
individuals’ early 50s and late 30s. Reported life satisfaction levels among Europeans men and
women minimize around the mid 40s. What explains such differences remains an open question.”
“This paper has one noticeable limitation. It is that these international data sets do not follow the
same individuals each year. As far as we know, there is no internationally comparable panel data set
on multiple nations in which general happiness or well-being questions are asked.”
---tentative explanations for the U-shape curve and its regularity:
1) Individuals learn to adapt to their strengths and weaknesses, and in mid-life quell their
infeasible aspirations;
2) Cheerful people live systematically longer than the miserable  in part a selection effect;
3) One gradually coming to one self’s blessings.
22. Diener & Oishi & Lucas – Personality, Culture, and Subjective-Well-Being: Emotional
and Cognitive Evaluations of Life

1. Introduction:
---SWB: fluctuations in moods, emotions, and self-evaluative judgments; long-term mean level
differences between individuals and societies.
---SWB measures:
1) Emotional components: broad survey measures, experience sampling and informant reports;
2) Cognitive components: life satisfaction surveys, measures of satisfaction and fulfillment in
various life domains.
 2. Personality and Subjective Well-Being:
---Personality Theories of Subjective Well-Being
*** temperament theories of personality and SWB:
(a) Baseline levels of affective and cognitive well-being;
(b) Emotional reactivity;
(c) Cognitive processing of emotional information.
e.g., Dynamic Equilibrium Model: individuals have unique baseline levels of well-being that are
determined by their personality.

3. Culture and Subjective Well-Being:
---differences in mean levels of subjective well-being between nations
International surveys of life satisfaction: consistent mean level differences across nations.
---the causes of societal mean level differences in subjective well-being
Societal differences in mean SWB: likely to be overestimated.
---wealth and related predictors
Strong relation between wealth and SWB of societies: income most strongly related to SWB at very
low levels of money (inherent human needs).
Higher SWB is reported in wealthy nations: explanation unclear.
---other causes of differences between cultures
Self-serving biases: self-enhancement vs. self-criticism, approach vs. avoidance goals.
---different correlates of subjective well-being across cultures
Satisfaction with the self: strongly correlated with life satisfaction in highly industrialized,
individualistic western nations.
---universal versus variable causes of subjective well-being
*** Veenhoven: the universal livability idea;
*** Ryff: 6 universal needs (autonomy, growth, relationships, purpose in life, environmental
mastery, and self-acceptance);
*** Self-Determination Theory: 3 basic psychological needs (autonomy, competence, and
relatedness).

4. Conclusions:
“There are substantial individual differences in SWB, as well as mean level differences between
cultures. We have begun to understand why such differences occur. For example, there are
dispositional differences that predispose people to more or less positive affect, and genetics and
early rearing seem to contribute to such differences. At the cultural level norms in nations for
feeling positive emotions relate to the amount of pleasant emotions reported in those countries.
Are the causes of high SWB universal or are they particular to the culture one lives in? Perhaps both.
Some ubiquitous needs such as for temperature control, food, health, environmental control, and
social relationships might be necessary for SWB. These needs may be so likely to drive people’s
desires and goals that they almost inevitably have some impact on SWB. However, there also appear
to be differences in goals and values between individuals, and between cultures, that lead to distinct
predictors of SWB.
…… It appears that some cultures produce higher levels of SWB than do others. It seems unlikely
that the low levels of SWB found in very poor nations and in the former Soviet bloc countries are
merely measurement artifacts. At the same time, some differences in SWB between nations appear
to be due to the fact that people differentially value SWB. Thus, people may trade some amount of
positive emotions in order to obtain other things they value.
Do people want to be happy, or do they want other valued goals more than happiness?
Do they want those other goals because they would make them happy? We suggest that people all
over the world most want to be happy by achieving the things they value. Proving this assertion
represents one research goal of the future.”
23. Stevenson & Wolfers – The Paradox of Declining Female Happiness
---SWB measures: women’s happiness has declined both absolutely and relative to men.
 A new gender gap: one with higher SWB for men.
This shift: occurred through much of the industrialized world.
---contribution: trends over several decades in SWB by gender in the U.S. and other industrialized
countries, collecting evidence across a wide array of datasets covering various demographic groups,
time periods, countries, and measures of SWB.
---highlight the robust evidence in favor of a rather puzzling paradox:

 Women’s relative SWB has fallen over a period in which most objective measures point to
robust improvements in their opportunities.
1. Happiness Trends by Gender:
---data: GSS.
 Regression 1 (ordered probit): a decline in women’s happiness, but very little change in
men’s reported happiness; higher SWB for women until 2006.
---other sources: the “Virginia Slims American Women’s Opinion Polls”;
 Similar to GSS: a strong downward trend in life satisfaction for both men and women,
decline in happiness stronger for women.
---the Monitoring the Future Study.

 Young men: increasing happy, young women: slightly less happy.
2. Trends in the Gender Happiness Gap Across Groups:
---trends in male happiness: mirror trends in male earnings.
 Women of all education groups have become less happy over time with declines in
happiness having been steepest among those with some college.
---happiness decline among U.S. women: evidence irrespective of the age, marital, labor market, or
fertility status of the group analyzed.
---European countries: Eurobarometer (increasing happiness, but declining women’s happiness).
---alternative sources: the International Social Survey Program & the World Values Study.

3. Satisfaction in Various Life Domains:
---survey questions that assess men’s and women’s satisfaction across a number of domains: their
work, financial situation, family, and health.
---“paradox of the contented female worker”: women being over-represented in worse jobs (by
many objective standards), yet higher levels of job satisfaction than men.
---roughly constant job satisfaction trends among men & women: job satisfaction  offers little
explanation.
---married & nonmarried women: declines in financial satisfaction, yet not sufficient to explain the
decline in women’s happiness, but a contributor.
---gender gap in marital happiness: largely stable over time.
---women: lower health satisfaction.
---one limitation of the GSS data: no way of assessing whether the importance of specific domains to
overall happiness had changed over time.
---satisfaction of youth  girls have lost ground both absolutely and relatively to boys

 Women’s life satisfaction: more complicated as women have increased the number of
domains in which they wish to succeed.
4. Discussion:
“By most objective measures, the lives of women in the United States have improved dramatically
over the past 35 years. Moreover, women believe that their lives are better.
……
Yet trends in self-reported SWB indicate that happiness has shifted toward men and away from
women. This shift holds across industrialized countries regardless of whether the aggregate trend in
happiness for both genders is flat, rising, or falling.”
---alternative explanations of this paradox:
1) Other socioeconomic forces that have made women worse off;
e.g., decreased social cohesion, increased anxiety and neuroticism, and increased household
risk.
2) Broad social shifts such as those brought on by the changing role of women in society
fundamentally alter what measures of SWB are capturing;
3) The changes brought about through the women’s movement may have decreased women’s
happiness.
24. Herbst & Ifcher – The Increasing Happiness of U.S. Parents

1. Abstract:
---GSS & DDB LifeStyle Survey:
 Happier parents relative to non-parents, estimates of the parental happiness gap are
sensitive to the time-period analyzed.
 Children: appear to protect parents against social and economic forces that may be reducing
happiness among non-parents.
Results: consistent across two datasets, most subgroups, and various specifications.

2. Introduction:
---the existence of a parental happiness deficit
---potentially serious problems:
1) Assumption: constant average parental happiness gap;
2) Definition of “a parent”.
---primary goal: to examine whether the evolution in U.S. parents’ happiness differed from that of
non-parents over the past few decades.
Evidence: parents’ happiness increases over time relative to non-parents, as a result of an absolute
decline in non-parents’ happiness over time.
---3 potential explanations:
1) Being a parent protects adults against a growing number of social and economic forces;
e.g., the reduction in social & political trust, the fraying of community ties, and increasing
narcissism.
2) The observed relative increase in parental happiness: a reflection of a compositional shift in who
is a parent.
3) Perceptions regarding gender roles and the division of labor in the household, as well as the
utility of marriage and children, have evolved differently over time for parents and non-parents.
 3. Literature review:
---early literature: parents are worse off than non-parents across a variety of psychological domains.
---negative relationship between parental status and mental health: concentrated among young
parents.
---single parents: substantially more likely to experience stress and depression than their married
counterparts.
---social benefits of parenthood, greater social integration experienced by new parents.

4. Data and methods:
---data: GSS & LSS
---a parent: (focus on those who are actively parenting) a respondent who reports having children
ages 0-17 residing in the household.
---parents: significantly more likely to be female, non-White, employed, and married than nonparents, also significantly younger, less educated and poorer than non-parents, on average.
---A negative (positive) estimate of 𝛽1 indicates that there is a parental SWB deficit (surplus);
If the estimate of (𝛽2 − 𝛽3 ) is positive (negative), then it indicates that parents’ SWB increased
(decreased) over time relative to non-parents.

5. Results:
---𝛽1 : negative and statistically significant; (𝛽2 − 𝛽3 ): positive and statistically significant across both
datasets.
---consistent evidence: parents’ SWB increasing relative to non-parents regardless of household
structure (no evidence that having younger children or more children is associated with less relative
improvement in parental SWB).
---subgroup analysis: (men & women, employed & unemployed adults, employed men & employed
women, non-White & White adults, and more & less educated adults)
 Parents’ SWB is increasing relative to non-parents’ SWB, and that non-parents’ SWB is
decreasing absolutely.
---parents: improving financial situation, better health, less likely to alter their lives, more confident
and physically fit; more stress, deteriorating general health.

6. Discussion:
---“Using two nationally representative repeated cross-section surveys, we find evidence that
parents’ relative happiness is increasing over time, a finding that appears to be driven by the
absolute decline in non-parents’ happiness.”
---3 potential explanations:
1) Having children protects parents against social and economic factors that may be reducing wellbeing;
e.g., the decline in community and political involvement, growing disconnectedness from family
and friends, and the growth in economic insecurity.
 we estimate parents and non-parents’ time-trends replacing the dependent variables with
measures organized around the themes of
(1) Social and political connectedness;
(2) Social and political trust;
(3) Economic well-being, and
(4) Balancing multiple responsibilities available in the LSS.
Parents have not experienced the growing social disconnectedness and economic insecurity to
the same extent as non-parents.
2) It is possible that there has been a compositional shift in who is a parent, and this has driven the
observed relative increase in parental SWB;
3) It is possible that perceptions regarding gender roles and the division of labor in the household,
as well as the utility of marriage and children, have evolved differently over time for parents and
non-parents. This speaks not only to changes in the selection into parenthood, but also to
changes in views and behaviors within marriage and parenthood that may influence SWB.
 We estimate parents and non-parents’ time-trends replacing the dependent variables with
various attitudinal measures of gender, children, and marriage on a number of dimensions:
parents and non-parents’ attitudes have evolved in a similar manner.
“On balance, it appears that although the characteristics of parents and non-parents have changed
substantially over time, changing views about women, marriage, and children have evolved similarly
in both groups. Thus, a tentative conclusion is that such view likely do not explain the relative rise in
parents’ SWB over the last few decades.”
25. Stack & Eshleman – Marital Status and Happiness: A 17-Nation Study
“The literature on marital status and happiness has neglected comparative analysis, cohabitation, and
gender-specific analysis. It is not clear if the married-happiness relationship is consistent across nations,
if it is stronger than a cohabitation-happiness link, and if it applies to both genders. We address these
issues using data from 17 national surveys. A multiple regression analysis determined that the
relationship between marital status and happiness holds in 16 of the 17 nations and the strength of the
association does not vary significantly in 14 of the 17 nations. Being married was 3.4 times more closely
tied to the variance in happiness than was cohabitation, and marriage increases happiness equally
among men and women. Marriage may affect happiness through two intervening processes. the
promotion of financial satisfaction and the improvement of health. These intervening processes did not
replicate for cohabitants.”
“Research on marital status and happiness has tended to be restricted to the U.S. We extend the
analysis to a set of 17 industrialized nations with diverse social and institutional frameworks. Controlling for sociodemographic variables, we found that married persons have a significantly higher level
of happiness than persons who are not married. This effect was independent of financial and healthoriented protections offered by marriage and was also independent of other control variables, including
ones for sociodemographic conditions and national character.
……
The relationship between marital status and happiness was marked by two intermediary processes.
Marriage increases financial satisfaction, which, in turn, increases happiness. Marriage also is associated
with a relatively high level of perceived health, which, in turn, elevates happiness. These findings lend
support to the hypothesis of social causation or marriage protection. The financial and health protection
offered by marriage affects the level of happiness. In short, a spouse provides emotional support, helps
to control the health-oriented behaviors of his or her partner, and contributes to household income.
These findings on intermediary processes are largely consistent with recent work on other aspects of
well- being, such as morbidity.
……
Marriage was not, however, the most important correlate of happiness. Reported health and financial
satisfaction were the two principle predictors of happiness. Being married served as the third most
important correlate of happiness. The only investigation of happiness that we could locate that included
both indicators of health and financial security was done for a small sample in a rural community in
Ontario, Canada (Michalos, 1983). It also found that health and financial security were the two leading
predictors of happiness. In our study, however, marriage was more important than any of the remaining
controls, including measures of religious involvement, age, gender, and national character.”
26. De Neve & Christakis & Fowler & Frey – Genes, Economics, and Happiness
“We explore the influence of genetic variation on subjective well-being by employing a twin design and
genetic association study. In a nationally-representative twin sample, we first show that about 33% of
the variation in life satisfaction is explained by genetic variation. Although previous studies have shown
that baseline happiness is significantly heritable, little research has considered molecular genetic
associations with subjective well-being. We study the relationship between a functional polymorphism
on the serotonin transporter gene (5-HTTLPR) and life satisfaction. We initially find that individuals with
the longer, transcriptionally more efficient variant of this genotype report greater life satisfaction
(n=2,545, p=0.012). However, our replication attempts on independent samples produce mixed results
indicating that more work needs to be done to better understand the relationship between this
genotype and subjective well-being. This work has implications for how economists think about the
determinants of utility, and the extent to which exogenous shocks might affect individual well-being.”
“……While the 5-HTT gene may be a good candidate gene for further study, it is important to reemphasize that there is no single “happiness gene. Instead, there is likely to be a set of genes whose
expression, in combination with environmental factors, influences subjective well-being.”
“We also believe that genetic association studies such as ours may be a new catalyst for two important
lines of research. First, economics places a high premium on causal inference. Provided that robust
genetic associations are available and that exclusion restrictions are met, genotypes could function as
instrumental variables to disentangle the reverse causality in important relationships that have been
plagued by endogeneity…… Second, integrating genetic variation and neuroscientific research may
further advance our understanding of the biological underpinnings of individual behavior.”