Affective States and the Notion of Happiness: A Preliminary Analysis

Large-scale social surveys typically elicit levels of happiness and/or life satisfaction. This paper studies how such reports of happiness and life satisfaction are related to measures of positive affect (PA) and negative affect (NA). Major findings are the following: (1) PA and NA levels jointly predict happiness better than they predict life satisfaction. (2) PA levels predict happiness better than do NA levels. (3) NA levels predict life satisfaction better than do PA levels. (4) The PA items that predict happiness include those that predict life satisfaction (but not vice versa). (5) The NA items that predict happiness are distinct from those that predict life satisfaction. The study contributes to the literature by characterizing reported happiness and life satisfaction in terms of the specific positive and negative affects involved, thus clarifying their respective affective state content. Finding (4) is consistent with the mediator model of affective and cognitive well-being, according to which people in part directly rely on the affective component to judge life satisfaction. Our results are robust to several methodological strategies, but preliminary with regard to the small sample size (N = 144)

Anti-Inflation Policy Benefits the Poor: Evidence from Subjective Well-Being Data

Using subjective well-being data for more than 91,000 individuals in 30 OECD countries, 1990-2008, we study how people's implicit aversion towards inflation varies with income and other socio-economic characteristics. While inflation aversion decreases with income, it increases with the education level. Contrary to previous findings using statedpreferencemethods, these relationships apply not only to absolute inflation aversion, but also to the aversion towards inflation relative to unemployment. These results survive several robustness checks. The differing results concerning the roles of income and education suggest that different dimensions of being disadvantaged influence the well-being effects of inflation in different ways

How Has the Crisis of 2008-2009 Affected Subjective Well-Being?

Results of life satisfaction regressions for more than 91,000 individuals are used to investigate how the macroeconomic crisis of 2008-2009 has affected subjective well-being (SWB) in 30 OECD countries. In a number of countries, the effect of the crisis on a representative person's SWB is of a similar magnitude as the effects of the most important personal life events. Our findings highlight the importance of GDP fluctuations for SWB

Direct and indirect effects of weather experiences on life satisfaction : which role for climate change expectations?

This paper deals with the effect of (I) damage experience from extreme weather events and (II) expectations concerning future climate change on subjective wellbeing (SWB). We use data of a large representative survey amongst German households. The effect of experienced weather events on SWB of the heads of the households is only significant for heat waves; not for storms, heavy rain, and floods. Concern about future climate change on the household level has a substantial negative impact on current SWB. Moreover, we divide the impact of experience into direct effects of damage and indirect effects, which affect current SWB via the channel of expectations regarding future climate change. Both direct and indirect effects of weather experiences are quantified. It becomes apparent that the indirect effect is significant but small compared to the direct effect

Comparative Economic Performance and Institutional Change in OECD Countries: Evidence from Subjective Well-Being Data

We use data on the subjective well-being (SWB) of more than 91,000 individuals in 30 member countries of the Organization for Economic Cooperation and Development (OECD) to assess the well-being effects of unemployment, inflation and national income growth. The relationships found are used to construct an index of national economic performance in terms of SWB. Applying the index to the period 1990-2009, we find that economic performance has improved in OECD overall and in the majority of countries, and that there has been a convergence of performance within the OECD. We then present evidence that OECD countries' economic performance, as measured, is positively related to institutional change towards more trade openness and better governance quality

Is Pro-Environmental Consumption Utility-Maximizing? Evidence from Subjective Well-Being Data

This paper studies whether pro-environmental consumption choices are consistent with utility maximization and what role the consumption behavior of reference persons and one's own past behavior play in this context. By combining data on individuals' pro-environmental consumption from a unique data set with data on subjective well-being, we find that people could attain higher well-being (utility) by unilaterally consuming more environmentally friendly while at the same time reducing the quantity consumed. The distortions identified are smaller when people's reference persons consume more environmentally friendly and when the individual has a longer environmental friendly consumption history. We therefore conclude that learning from the behavior of others and from one's own past experience may help alleviate decision error in environment-friendly consumption

Income comparisons, income formation, and subjective well-being: New evidence on envy versus signaling

Drawing on the distinction between envy and signaling effects in income comparison, this paper uses 307,465 observations for subjective well-being and its covariates from Germany, 1990-2009, to study whether the nature of income comparison has changed in the process of economic development, and how such changes are related to changes in the nature of income formation. By conceptualizing a person's comparison income as the income predicted by an earnings equation, we find that, while in 1990-1999 envy has been the dominant concern in West Germany and signaling the dominant factor in East Germany, income comparison was non-existing in 2000-2009. We also find that the earnings equation reflects people's ability more accurately in the second than in the first period. Together, these findings suggest that comparing one's income with people of the same ability is important only when ability is insufficiently reflected in own income

Competitive Altruism and Endogenous Reference Group Selection in Private Provision of Environmental Public Goods

We develop and test a model of social comparison in which individuals gain status through pro-social behavior (competitive altruism) and in which they endogenously choose the reference group and associated reference standard involved in signaling status (reference group selection). In our framework of private provision of environmental public goods, the optimal reference standard involves a balance between the magnitude of the status signal (implying a low reference standard) and the higher value of the signal in a greener social environment. By using a unique set of survey data we find evidence of (a) respondents behaving in a competitively altruistic fashion and (b) reference persons' intensity of pro-environmental behavior depending on relevant attitudes of the respondents, consistent with predictions from our framework of reference group selection