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Does the risk of poverty reduce happiness?
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Caria, Stefano and Falco, Paolo (2018) Does the risk of poverty reduce happiness? Economic Development and Cultural Change, 67 (1). pp. 1-28. doi:10.1086/697556 ISSN 0013-0079.
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Official URL: http://dx.doi.org/10.1086/697556
Abstract
We investigate the unexplored link between the risk of poverty and happiness in the context of a developing country. Using unique longitudinal data, we estimate workers’ vulnerability to income poverty and find a strong negative relationship between vulnerability and life satisfaction, over and above the positive income effect commonly documented in the literature. The result is robust and cannot be reduced to the effect of two-sided uncertainty. A matched behavioral experiment shows that respondents are significantly loss averse. We conclude that downside risk is an important determinant of happiness and of economic decisions under uncertainty. Policies that mitigate downward risk may thus have direct impacts on both well-being and efficiency.
| Item Type: | Journal Article | ||||||||||||||||||
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| Subjects: | H Social Sciences > HB Economic Theory H Social Sciences > HC Economic History and Conditions |
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| Divisions: | Faculty of Social Sciences > Economics | ||||||||||||||||||
| Library of Congress Subject Headings (LCSH): | Poverty -- Economic aspects -- Developing countries, Happiness -- Economic aspects, Economics -- Psychological aspects, Quality of life -- Developing countries, Well-being -- Developing countries, Happiness | ||||||||||||||||||
| Journal or Publication Title: | Economic Development and Cultural Change | ||||||||||||||||||
| Publisher: | University of Chicago Press | ||||||||||||||||||
| ISSN: | 0013-0079 | ||||||||||||||||||
| Official Date: | 2018 | ||||||||||||||||||
| Dates: |
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| Volume: | 67 | ||||||||||||||||||
| Number: | 1 | ||||||||||||||||||
| Page Range: | pp. 1-28 | ||||||||||||||||||
| DOI: | 10.1086/697556 | ||||||||||||||||||
| Status: | Peer Reviewed | ||||||||||||||||||
| Publication Status: | Published | ||||||||||||||||||
| Access rights to Published version: | Restricted or Subscription Access | ||||||||||||||||||
| Date of first compliant deposit: | 8 October 2020 | ||||||||||||||||||
| Date of first compliant Open Access: | 8 October 2020 | ||||||||||||||||||
| RIOXX Funder/Project Grant: |
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