Essays on economics and happiness

In this thesis it was intended to deepen the literature of the Economics of Happiness, in three different directions. As a conductive line, it was attempted to better explore the multidisciplinary character of the happiness concept, while remaining grounded on economic methodologies. The first chapter presents the insertion of the Economics of Happiness in the broad history of economic thought, emphasizing the original contaminations and the reasons of the early detachment between economics and psychology, while highlighting the happiness’ multidisciplinary essence, and its methodological specificities. In the sequence, some findings and theories from different disciplines were then introduced in the following chapters, either as part of their starting hypothesis or to help interpret their findings. Chapter 2 investigates the causes of a possible happiness differential between men and women, worldwide. Based on the fact that women have passed through historically landmark changes, shaping new original gender roles, it was intended to approach this question with an encompassing view, also borrowing concepts from the Capabilities Approach of Martha Nussbaum and Amartya Sen. The empirical strategy was performed using data from the World Values Survey (WVS), European Values Studies (EVS), CIRI Human Rights and the World Development Indicators (WDI), which combined together contemplate 20 years spanning from 1981 to 2009 and across 85 countries. The first finding is that there exist a happiness gender gap, and it favours women. The main message from this study, in a nutshell, is that important female rights and achievements are not automatically guarantees of happiness, but only when accompanied by conducive internal and external conditions, such as female’s feeling of control over own life and pro-women social beliefs guiding the social norm. These complementary conditions are really important to be considered for public policies, since if they do not materialize, true and meaningfully perceived gender equality will not be attained, regardless the proclaimed formal rights and achievements. Chapter 3 in its turn revisits the field “established” finding regarding the impact of unemployment compared to that of inflation in terms of subjective well-being. The universal character of this question is analysed for the case of developing countries. The main hypothesis conducting this study is that the impact of inflation is stronger than that of unemployment, differently from what has been found in the previous literature, focused on developed nations. The reasoning for this idea comes from the fact that developed and developing countries experience very different socio-economic and development paths that can influence the perception of these two relevant macroeconomic conditions and the corresponding coping strategies (also with respect to experiences and social remedies for inflationary and jobless periods). Using the WVS, EVS, WDI, Schneider’s (2005) and Dreher’s (2006) data, across 55 developing countries and 15 years (from 1990 to 2008), it is performed an empirical two-step methodology, which takes into account either individual characteristics (including individual personality traits – affirmed findings in Psychology) and country level characteristics (including two macroeconomic indicators intrinsic of developing countries, i.e. the presence and size of the informal market as well as the existence of foreign debt with the IMF). Three are the main results of practical importance for public policies. The most stable result is the strongly and significant negative effect of inflation and the non significant negative effect of aggregate unemployment on well-being. This inverted trade-off was strengthened and confirmed by robustness tests. An adaptation effect of inflation in high-inflationary periods emerges from a non-linearity investigation of inflation (which can be said to exemplify the framing and set point effects postulated by the Prospect Theory). This work also provides evidence, for the first time on the happiness literature, of an austerity negative effect of the IMF intervention. All in all, this thesis contributes to the economics of happiness research agenda calling the attention to the country-divergent nature of the happiness’ appreciation, especially for what regards the developing and developed worlds, as well as to the importance of taking into account the multidisciplinary essence of happiness. Both elements can evidence collective and individual subjective dynamics usually hidden but present in the economic and social process.