UNSPECIFIED. (2003) The macroeconomics of happiness. REVIEW OF ECONOMICS AND STATISTICS, 85 (4). pp. 809-827. ISSN 0034-6535

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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.

Item Type:	Journal Article
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences
Journal or Publication Title:	REVIEW OF ECONOMICS AND STATISTICS
Publisher:	M I T PRESS
ISSN:	0034-6535
Date:	November 2003
Volume:	85
Number:	4
Number of Pages:	19
Page Range:	pp. 809-827
Publication Status:	Published
URI:	http://wrap.warwick.ac.uk/id/eprint/9170

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