A critique of the econometrics of happiness: Are we underestimating the returns to education and income?

A large "happiness", or life satisfaction, literature in economics makes use of Likert-like scales in assessing survey respondents' cognitive evaluations of their lives. These measures are being used to estimate economic benefits in every empirical field of economics. Typically, analysis of these data have shown remarkably low direct returns of education for improving subjective well-being. In addition, arguably, the inferred impact of material wealth and income using this method is also unexpectedly low as compared with other, social factors, and as compared with economists' prior expectations which underlie, in some sense, support for using GDP as a proxy for more general quality of life goals. Discrete response scales used ubiquitously for the reporting of life satisfaction pose cognitive challenges to survey respondents, so differing cognitive abilities result in different uses of the scale, and thus potential bias in statistical inference. This problem has so far gone unnoticed. An overlooked feature of the distribution of responses to life satisfaction questions is that they exhibit certain enhancements at focal values, in particular at 0, 5, and 10 on the eleven-point scale. In this paper, I investigate the reasons for, and implications of, these response patterns. I use a model to account for the focal-value behavior using a latent variable approach to capture the "internal" cognitive evaluation before it is translated to the discrete scale of a survey question. This approach, supported by other more heuristic ones, finds a significant upward correction for the effects of both education and income on life satisfaction

Veblen goods and neighbourhoods: endogenising consumption reference groups

One of the significant developments in the last four decades of economics is the growing empirical evidence that individual consumption preferences, as mea- sured by self-reported life satisfaction, are neither fixed nor self-centred but are instead overwhelmingly dominated by externalities, partly in the form of reference levels set by others and by one’s own experience. Welfare analysis recognising this fact is likely to indicate enormous revisions for macroeconomic policy and social objectives as well as for what is taught in economics at all levels. Yet the task of constructing general equilibrium models based on this microeconomic re- ality is still in its infancy. In this work I take the conventional stance that decision makers understand their own utility function. Therefore, they can choose the mi- lieu in which they immerse themselves with the sophisticated understanding that it will affect their own consumption reference levels and therefore the degree of satisfaction they derive from their private consumption. At the same time, their private consumption will help to set the reference level for others in their chosen group. I treat theoretically the problem of such endogenous formation of consump- tion reference groups in the context of a simultaneous choice of neighbourhoods and home consumption amongst a heterogenous population. For both discrete and continuous distributions of types, I find general equilibrium outcomes in which differentiation of neighbourhoods occurs endogenously and I compare the welfare implications of growth in such economies.reference income; veblen goods; consumption reference groups; club goods

Do Rising Top Incomes Lift All Boats?

Pooling data for 1905 to 2000, we find no systematic relationship between top income shares and economic growth in a panel of 12 developed nations observed for between 22 and 85 years. After 1960, however, a one percentage point rise in the top decile’s income share is associated with a statistically significant 0.12 point rise in GDP growth during the following year. This relationship is not driven by changes in either educational attainment or top tax rates. If the increase in inequality is permanent, the increase in growth appears to be permanent. However, our estimates imply that it would take 13 years for the cumulative positive effect of faster growth on the mean income of the bottom nine deciles to offset the negative effect of reducing their share of total income.inequality, growth, income distribution, national income

Do Rising Top Incomes Lift All Boats?

Pooling data for 1905 to 2000, we find no systematic relationship between top income shares and economic growth in a panel of 12 developed nations observed for between 22 and 85 years. After 1960, however, a one percentage point rise in the top decile's income share is associated with a statistically significant 0.12 point rise in GDP growth during the following year. This relationship is not driven by changes in either educational attainment or top tax rates. If the increase in inequality is permanent, the increase in growth appears to be permanent. However, our estimates imply that it would take 13 years for the cumulative positive effect of faster growth on the mean income of the bottom nine deciles to offset the negative effect of reducing their share of total income.inequality, growth, income distribution, national income

Extended Techniques and Electronic Enhancements: A Study of Works by Ian Clarke

British flutist Ian Clarke is a leading performer and composer in the flute world. His works have been performed internationally and have been used in competitions given by the National Flute Association and the British Flute Society. Clarke’s compositions are also referenced in the Peters Edition of the Edexcel GCSE (General Certificate of Secondary Education) Anthology of Music as examples of extended techniques. The significance of Clarke’s works lies in his unique compositional style. His music features sounds and styles that one would not expect to hear from a flute and have elements that appeal to performers and broader audiences alike. Clarke is helping to usher in a new era in flute literature by creating works for the more advanced performer which employ extended techniques, pop, blues and electronics to create a distinct sound. Meanwhile, his well-defined notational style and clear melodies appeal to relatively inexperienced players who find the works more accessible and entertaining to play. This document will propose a new approach to performance practice using “Electronic Enhancements” to add to and alter the sound of the flute to create distinct and unusual effects. Included in this discussion will be the use of guitar and vocal pedal effects. Although Clarke does not use these electronic effects, he encourages such experimentation. I will further discuss other aspects of playing with electronics, including different types of microphones that could be used with these types of effects, monitors, amplifiers, and mixers and how these components function in an entire set up, and how they may be applied to Clarke’s music

The Discipline of Happiness

A deeply personal Journey, “The Discipline of Happiness” blends fundamental philosophy with the power of visual art. In a 42‐year quest for purpose certain theories have been tried, championed, discredited, and discarded. The distillation of these ideas into my current theory provides, more saliently than the theory itself, a venue for discussion of the creative process. My creativity often manifests itself in visual terms. Through the medium of an extended artist statement I reflect on the virtues of thinking in both a linguistic and spatial manner. Orchestrating the dual modes of inquiry, semantic and visual, into a single narrative highlights the evolution of my ideas about happiness. This journey is aided by a description of the associated artwork following each exposition. The effort clarifies my concepts for critical evaluation while establishing a framework for future innovation. By applying prose and picture to my thought pattern, discovery of the undercurrents of my creative wanderings bubble to the surface. If I understand my process, then better pedagogy may follow. Focus on one set of theories, the discipline of happiness, reduces the chaos of the possible into more quantifiable units of inspiration. Compressed in these theories the meaning of life and the apparatus for learning support, but do not dominate the discussion. Personal history provides context for the generation of creative definitions as well as the Achilles heel undermining the conclusions. Ultimately, I provide no answers; I debunk my own theory, hoping only that the discussion of the process of creativity remains compelling

Inequality and Mortality: Long-Run Evidence from a Panel of Countries

We investigate whether changes in economic inequality affect mortality in rich countries. To answer this question we use a new source of data on income inequality: tax data on the share of pretax income going to the richest 10 percent of the population in Australia, Canada, France, Germany, Ireland, the Netherlands, New Zealand, Spain, Sweden, Switzerland, the UK, and the US between 1903 and 2003. Although this measure is not a good proxy for inequality within the bottom half of the income distribution, it is a good proxy for changes in the top half of the distribution and for the Gini coefficient. In the absence of country and year fixed effects, the income share of the top decile is negatively related to life expectancy and positively related to infant mortality. However, in our preferred fixed-effects specification these relationships are weak, statistically insignificant, and likely to change their sign. Nor do our data suggest that changes in the income share of the richest 10 percent affect homicide or suicide rates

How state and local governments can buy their citizens’ happiness

One major goal for elected officials and policymakers is to improve the happiness of their constituents in cost-effective ways. But how do individuals’ circumstances influence which policies are likely to make them feel more satisfied with their lives? In new research which draws on a large Connecticut-based survey, Christopher Barrington-Leigh and Jan Wollenberg find that improvements in areas of people’s lives such as food security and social engagement can lead to much greater improvements in their happiness compared to increasing their incomes. With that in mind, they recommend that by targeting specific groups and needs, state and local agencies may be much more effective at improving happiness compared to more blanket measures which affect everyone