Beyond the Joneses: inter-country income comparisons and happiness

Our paper provides some novel evidence on the burgeoning literature on life satisfaction and relative comparisons by showing that in the last 30 years comparisons with the wellbeing of top income countries have generated progressively more negative feelings on a large sample of individuals in the Eurobarometer survey. The paper contributes in two main directions: (i) it shows that countries, and not just neighbors, can be reference groups; (ii) it documents a globalization effect by which distant countries become progressively closer and comparisons among them more intense and relevant. Our findings may be interpreted in support of the well known hypothesis that migratory decisions are affected by the gap in economic wellbeing between origin and destination country since they document that such gap affects individual life satisfaction.life satisfaction, relative income, standard of living, comparisons

Beyond the Joneses: Inter-country income comparisons and happiness

Our paper provides some novel evidence on the burgeoning literature on life satisfaction and relative comparisons by showing that in the last 30 years comparisons with the wellbeing of top income countries have generated progressively more negative feelings on a large sample of individuals in the Eurobarometer survey. The paper contributes in two main directions: (i) it shows that countries, and not just neighbors, can be reference groups; (ii) it documents a globalization effect by which distant countries become progressively closer and comparisons among them more intense and relevant. Our findings may be interpreted in support of the well known hypothesis that migratory decisions are affected by the gap in economic wellbeing between origin and destination country since they document that such gap affects individual life satisfaction.life satisfaction, relative income, standard of living, comparisons

The 60s Turnaround as a Test on the Causal Relationship between Sociability and Happiness

The nexus between social leisure and life satisfaction is riddled with endogeneity problems. In investigating the causal relationship going from the first to the second variable we start from considering that retirement is an event after which the time investable in (the outside job) relational life increases. We instrument social leisure with the probability of retirement of the three and four years younger cohorts. With such approach we document that social leisure has a positive and significant effect on life satisfaction. Our findings shed some light on the age-happiness pattern. Policy implications are also discussed.Life satisfaction, relational goods, social capital

Beyond the Joneses: inter-country income comparisons and happiness

Our paper provides some novel evidence on the burgeoning literature on life satisfaction and relative comparisons by showing that in the last 30 years comparisons with the wellbeing of top income countries have generated progressively more negative feelings on a large sample of individuals in the Eurobarometer survey. The paper contributes in two main directions: (i) it shows that countries, and not just neighbors, can be reference groups; (ii) it documents a globalization effect by which distant countries become progressively closer and comparisons among them more intense and relevant. Our findings may be interpreted in support of the well known hypothesis that migratory decisions are affected by the gap in economic wellbeing between origin and destination country since they document that such gap affects individual life satisfaction.life satisfaction, relative income, standard of living, comparisons.

Children, Happiness and Taxation

Empirical analyses on the determinants of life satisfaction often include the impact of the number of children variable among controls without fully discriminating between its two (socio-relational and pecuniary) components. In our empirical analysis on the German Socioeconomic Panel we show that, when introducing household income without correction for the number of members, the pecuniary effect prevails and the sign is negative while, when we equivalise income with the most commonly adopted equivalence scales, the non pecuniary (socio-relational) effect emerges and the impact of the variable is positive and significant above a minimal scale elasticity threshold. We further reject slope homogeneity and show that the positive relational effect is stronger for males, below median income households and East Germans. We interpret these subsample split results as driven by heterogeneous opportunity costs. Our empirical results give rise to a paradox: why people have children if the overall (pecuniary plus relational) effect on life satisfaction is negative? We provide in the paper some interpretations consistent with our findings. Some of them are based on motivational complexity. This implies that demographic policies and the paradox are strictly connected. Effectiveness of tax/subsidies impacting on fertility crucially depends on whether the children paradox may be solved within the self-interested rationality paradigm.Equivalised income, scale elasticities, life satisfaction

The 60es turnaround as a test on the causal relationship between sociability and happiness

The nexus between relational life and life satisfaction is riddled with endogeneity problems. By investigating the causal relationship going from the first to the second variable we consider that retirement is a shock which increases the time investable in (outside job) relational life. As a consequence we instrument investment in relational goods with the aggregate exogenous age-retirement pattern. With such approach we document that investment in relational life has a positive and significant effect on life satisfaction. Consequences of our findings in terms of retirement effects and age-happiness pattern are also discussed.life satisfaction, relational goods, social capital

The value of diplomacy: Bilateral relations and immigrant well-being

This paper attempts to establish the value of good relationships between countries by considering their effect on a group of individuals who are arguably intimately affected by them: immigrants. We appeal to an index of conflict/cooperation which is calculated as an annual weighted sum of news items between two countries. This index is matched to a sample of immigrants to Germany in the SOEP data. The index of bilateral relations thus exhibits both time-series and cross-section variation. Good relations are positively and significantly correlated with immigrant life satisfaction, especially when we downplay low-value news events. This significant effect is much stronger for immigrants who have been in Germany longer, and who expect to stay there forever. This is consistent with good relations directly affecting the quality of immigrants' lives in the host country, but is not consistent with assimilation. There is thus a significant value to diplomacy: good relationships between home and host countries generate significant well-being externalities for those who live abroad.migration ; bilateral relations ; life satisfaction ; assimilation ; diplomacy

The 60s Turnaround as a Test on the Causal Relationship between Sociability and Happiness

The nexus between social leisure and life satisfaction is riddled with endogeneity problems. In investigating the causal relationship going from the first to the second variable we start from considering that retirement is an event after which the time investable in (the outside job) relational life increases. We instrument social leisure with the probability of retirement of the three and four years younger cohorts. With such approach we document that social leisure has a positive and significant effect on life satisfaction. Our findings shed some light on the age-happiness pattern. Policy implications are also discussed

The value of diplomacy: Bilateral relations and immigrant well-being

This paper attempts to establish the value of good relationships between countries by considering their effect on a group of individuals who are arguably intimately affected by them: immigrants. We appeal to an index of conflict/cooperation which is calculated as an annual weighted sum of news items between two countries. This index is matched to a sample of immigrants to Germany in the SOEP data. The index of bilateral relations thus exhibits both time-series and cross-section variation. Good relations are positively and significantly correlated with immigrant life satisfaction, especially when we downplay low-value news events. This significant effect is much stronger for immigrants who have been in Germany longer, and who expect to stay there forever. This is consistent with good relations directly affecting the quality of immigrants' lives in the host country, but is not consistent with assimilation. There is thus a significant value to diplomacy: good relationships between home and host countries generate significant well-being externalities for those who live abroad.Ce papier traite de la question de la valeur, en termes de bien-être, des bonnes relations entre pays, par le biais de l'analyse d'un groupe d'individus liés aux deux pays : les immigrés. Nous faisons appel à un indice de conflit et coopération calculé comme une somme pondérée du nombre de communiqués de presse entre deux pays. Cet indice est ensuite apparié à un échantillon d'immigrés en Allemagne dans les données du SOEP. Notre mesure des relations bilatérales varie donc non seulement dans le temps mais aussi entre immigrés venant de pays différents. Nous observons une relation positive et significative entre la satisfaction dans la vie des immigrés et la qualité des relations bilatérales entre le pays d'accueil et le pays d'origine. Cet effet est plus marqué pour les immigrés présents en Allemagne depuis plus longtemps et qui veulent y rester. Ce résultat témoigne de l'effet direct des relations internationales sur la qualité de la vie quotidienne des immigrés dans le pays d'accueil, un effet qui semble contradictoire avec l'hypothèse assimilation. L'effet de la diplomatie sur le bien-être est donc positive

The New EU Stability and Growth Pact and its Fiscal Implications for Italy

On the 30th of April 2024, the new EU Stability and Growth Pact (SGP) entered into force following an approach based on country-specific fiscal adjustments. This paper presents illustrative scenarios for Italy’s public finances, carried out using the DSA framework developed by the Parliamentary Budget Office and adapted to be broadly consistent with the new SGP. The scenarios are compared with those consistent with the requirements set in the initial legislative proposals put forward by the European Commission in April 2023 and with the ones that assume the convergence of the structural balance to the medium-term budgetary objective (MTO), one of the main rules of the previous SGP. These scenarios show that the multiannual fiscal consolidation, broadly consistent with the new SGP, is estimated in an annual adjustment of the structural primary balance of around 1 percentage point of GDP with a 4-year adjustment path and of around 0.5-0.6 percentage points with a 7-year adjustment path. No substantial difference emerges between the adjustment required by the final version of the new SGP and the one required by the European Commission proposal. Indeed, the paper shows that, in the case of Italy, the debt sustainability safeguard, introduced in the final version of the new SGP, is not binding, while the deficit resilience safeguard binds only after the adjustment period, although just in some scenarios and for a limited number of years. Finally, the comparison between the fiscal consolidation consistent with the previous convergence to the MTO and the one consistent with the new SGP, shows that the latter implies either the same annual adjustment or a lower one during a 7-year adjustment period, while it requires a greater one during a 4-year adjustment period. However, in the new framework, a considerably smaller correction is required after the adjustment period