Money Does not Buy Happiness: Or Does It? A Reassessment Based on the Combined Effects of Wealth,Income and Consumption

The paper uses household economic panel data from five countries—Australia, Britain, Germany, Hungary and The Netherlands—to provide a reassessment of the impact of economic well-being on happiness. The main conclusion is that happiness is considerably more affected by economic circumstances than previously believed. In all five countries wealth affects life satisfaction more than income. In the countries for which consumption data are available (Britain and Hungary), non-durable consumption expenditures also prove at least as important to happiness as income.

Measuring longevity achievements under welfare interdependencies: a case for joint life expectancy indicators

Whereas period life expectancy constitutes an intuitive indicator of the survival conditions prevailing at a particular period, this paper argues that, given the existence of welfare interdependencies, that widespread indicator is nonetheless an incomplete measure of the longevity achievements relevant for human well-being. The central importance of coexistence for human-beings implies that usual life expectancy measures should be complemented by joint life expectancy indicators, which measure the average coexistence time under particular survival conditions. After a study of the theoretical foundations of ‘single’ and ‘joint’ life expectancy indicators, it is shown that joint life expectancy measures tend to enrich significantly the comparison of longevity achievements across countries and periods. Moreover, the introduction of joint life expectancy indicators—as a complement to conventional life expectancy measures—into multi-variable indexes such as the United Nations’ HDI is also shown to affect international rankings of standards of living to a non negligible extent.

Life Goals Matter to Happiness: A Revision of Set-Point Theory

Using data from the long-running German Socio-Economic Panel Survey (SOEP), this paper provides evidence that life goals matter substantially to subjective well-being (SWB). Non-zero sum goals, which include commitment to family, friends and social and political involvement, promote life satisfaction. Zero sum goals, including commitment to career success and material gains, appear detrimental to life satisfaction. Finding that conscious life goals matter can potentially make an important contribution to SWB theory. The most widely accepted theory—set-point or dynamic equilibrium theory—essentially claims that set-points are near-automatic consequences of hereditary characteristics, including personality traits. Life goals play no role in these theories and major life events are viewed as having only a transitory effect. The SOEP panel data show that, over a 15–20 year period, non-trivial minorities record substantial changes in their set-points. This paper shows linkages between these changes and (a) the personality traits of extraversion, neuroticism and internal locus of control and (b) choice of life goals.

Ageing of a giant: a stochastic population forecast for China, 2006–2060

This paper presents a stochastic population forecast for China with a special emphasis on population ageing. The so-called scaled model for error was used to quantify the uncertainty attached to the population predictions. Data scarcity was a major problem in the specification of the expected error of the population forecast. Therefore, the error structures estimated for European countries were used with some modifications, taking into account the large size and heterogeneity of the Chinese population. The stochastic forecast confirms the expectation of extremely rapid population ageing during the first half of the twenty-first century in China. The old age dependency ratio (OADR) will certainly increase. Simply maintaining the current demographic rates (no international migration) would drive the OADR to 0.42 in 2060, four times the current level. Including expected declines in mortality and net outmigration in the projection would increase the median OADR in 2060 to 0.59, with a 80% prediction interval of [0.47, 0.75]. In particular, the oldest-old population will grow much faster than any other age group. This development has major implications for policy-making in China.

Child mortality, fertility, and human capital accumulation

This article analyzes the impact of decline in child mortality on fertility and economic growth. The study shows that the timing of mortality relative to education is crucial to implications of mortality decline. If child mortality is realized before education starts, an exogenous decline in child mortality leads to a decline in education—a finding that is opposite to those of studies that considered a decline in mortality after the cost of education has been incurred. The work also demonstrates the role of parental human capital in reducing child mortality and the causal link between rising education and declining child mortality.

Temporary Employment and Social Inequality in Canada: Exploring Intersections of Gender, Race and Immigration Status

Using data from the 2002–2004 waves of Survey of Labour and Income Dynamics, this article investigates the consequences of different types of temporary employment—fixed-term or contract, casual, agency and seasonal employment—for differently situated workers in Canada. Attention to intersecting social locations of gender, race and immigrant status helps capture the complex implications of temporary work for inequality. In particular, it highlights the salience of gender relations in shaping workers’ experience of insecurity in different types of temporary employment.

Investment in health when health is stochastic

This paper applies stochastic control theory to the Grossman model of investment in health to characterize the case of a serious illness, i.e., one that permanently reduces the individual’s stock of health capital. Health itself is modelled as a stochastic variable, whose variation over time is determined partly by a deterministic factor and partly by a random factor with a Poisson distribution. After setting out the equations for the deterministic and stochastic approaches, phase diagrams illustrate how the introduction of uncertainty alters the model. The framework is also used to consider the effect of the introduction of a vaccine.

Understanding the effects of siblings on child mortality: evidence from India

Given the intrinsically sequential nature of childbirth, timing of a child’s birth has consequences not only for itself but also for its older and younger siblings. The paper argues that prior spacing and posterior spacing between consecutive siblings are thus important measures of intensity of sibling competition for limited parental resources. While the available estimates of child mortality tend to ignore the endogeneity of sibling composition, we use a correlated recursive model of prior and posterior spacing and child mortality to correct it. There is evidence that uncorrected estimates under-estimate the effects of prior and posterior spacing on child mortality.

From Casual Work to Economic Security: The Case of British Columbia

Analysis of casual work in British Columbia is an important issue given that the increase in casual work has been greater in this province than in other provinces in Canada and given that the labour market has been substantially deregulated since 2001. In this paper, we analyse how individuals’ casual employment status affects their economic security based on a specially designed survey undertaken by the authors. We follow the ILO’s classification of the dimensions of economic security but, based on our findings, add a further dimension—Time security—As being of particular importance to casual workers. On the basis of these results, we analyse the policy interventions that might be necessary to increase the economic security of casual workers, policies which we suggest can best be conceptualized as providing a “security quilt”.

Social Capital and Community Heterogeneity

Recent findings indicate that more pronounced community heterogeneity is associated with lower levels of social capital. These studies, however, concentrate on specific aspects in which people differ (such as income inequality or ethnic diversity). In the present paper, we introduce the number of parties in the local party system as a more encompassing measure of community heterogeneity. This builds on the argument that the number of relevant socio-economic cleavages in the population (i.e. heterogeneity) determines the level of party system fragmentation. Using data on 307 Flemish municipalities, we find that municipalities with a more heterogeneous population indeed have lower levels of social capital. Hence, our study endorses—and generalizes—previous results linking community heterogeneity to lower levels of social capital.

Demography and housing demand—what can we learn from residential construction data?

There are obvious reasons why residential construction should depend on the population’s age structure. We estimate this relation on Swedish time series data and Organization for Economic Cooperation and Development panel data. Large groups of young adults are associated with higher rates of residential construction, but there is also a significant negative effect from those above 75. Age effects on residential investment are robust and forecast well out-of-sample in contrast to the corresponding house price results. This may explain why the debate around house prices and demography has been rather inconclusive. Rapidly aging populations in the industrialized world makes the future look bleak for the construction industry.

Capping Kids: The Family Cap and Nonmarital Childbearing

An explicit goal of policymakers in drafting welfare reform policies was to reduce incentives for nonmarital childbearing. This paper estimates the extent to which state welfare reforms have lowered age and race-specific nonmarital fertility. Using state-level data from 1984 to 1999—a time period that includes the passage and implementation of national welfare reform—we estimate fixed effects models corrected for heteroscedasticity and autocorrelation. We find evidence that the family cap, a policy that decreases or eliminates the incremental increase in benefits for mothers who have an additional child while on welfare, is associated with a decline in nonmarital birth ratios. However, we also find that the family cap is associated with higher marital birth rates. Taken together with other research, our findings suggest evidence of policy endogeneity.

Happiness is not Enough: Cognitive Judgements as Indicators of National Wellbeing

The European Social Survey, on which this issue of the journal focuses, is a 30-nation multi-funded survey series measuring attitude change. Started in 2001, it is characterised by unusually high standards of sampling and data equivalence. Its data are made available on-line with equal access to all, and have already attracted over 20,000 users. Many papers, articles and books based on the ESS have already appeared. But none has yet employed the data—whether alone or with other sources—to derive indicators of citizens’ cognitive judgements of their society. A recent EC grant is enabling the authors to fill this gap, covering topics such as trust in national institutions, tolerance, social cohesion, social trust and fear of crime. The aim is to be able to monitor changes over time in the distance between what citizens believe their society ought to be in these respects and how they actually perceive it to be.

Determinants of business success: an examination of Asian-owned businesses in the USA

Using confidential microdata from the US Census Bureau, we investigate the performance of Asian-owned businesses. Using regression estimates and a special non-linear decomposition technique, we explore the role that class resources, such as financial capital and human capital, play in contributing to the relative success of Asian businesses. We find that Asian-owned businesses are more successful than white-owned businesses for two main reasons—Asian owners have high levels of human capital and their businesses have substantial start-up capital. Using detailed information on both the owner and the firm, we estimate the explanatory power of several additional factors.

Imperfect goods and labor markets, and the union wage gap

Existing theoretical literature fails to explain satisfactorily the differences between the pay of workers who are covered by collective agreements and others who are not. This study aims at providing a model framework that is amenable to an analysis of this issue. Our general-equilibrium approach integrates a dual labor market and a two-sector product market. The results suggest that the so-called “union wage gap” is largely determined by the degree of centralization of the bargains and, to a somewhat lesser extent, by the expenditure share of the unionized sector's goods.

The Effects of Questionnaire Translation on Demographic Data and Analysis

The collection of demographic data in developing and, increasingly, developed countries often requires the translation of a survey instrument. This article addresses the implications for data and analysis of two of the most common modes of translation. The first, the officially sanctioned—though not empirically verified—method, involves the pre-fieldwork production of a standardized translation of the template questionnaire into all or most languages in which interviews are expected to be conducted. The second, rarely acknowledged in the literature but quite common in the field, occurs where there is a mismatch between the language of the questionnaire available to the interviewer and the language in which the actual interview is conducted. In this case, it is up to the interviewer to translate from the language of the questionnaire to the language of the interview. Using the 1998 Kenya DHS, in which 23% of interviews were translated in this non-standardized manner, we explore the effects of the two translation modes on three indicators of measurement error and on estimated multivariate relations. In general we find that the effects of non-standardized translation on univariate statistics—including higher-order variance structures—are rather moderate. The effects become magnified, however, when multivariate analysis is used. This suggests that the advantages of—and also costs associated with—standardized translation depend on the ultimate purposes of data collection.

International migration and economic growth: a source country perspective

This study analyzes the impact of international migration on economic growth of a source country in a stochastic setting. The model accounts for endogenous fertility decisions and distinguishes between public and private schooling systems. We find that economic growth crucially depends on the international migration since the migration possibility will affect fertility decisions and school expenditures. Relaxation of restrictions on the emigration of high-skilled workers will damage the economic growth of a source country in the long run, although a ‘brain gain’ may happen in the short run. Furthermore, the growth rate of a source country under a private education regime will be more sensitive to the probability of migration than a country under a public education regime.

The nonlinear behavior of competition: the impact of talent compression on competition

The competitiveness of a firm is intimately related to the productivity of its components. The distribution of profits should then be highly correlated with the distribution of productivity—the more equal distribution of productivity the more equal distribution of rents. To assess this argument, the present paper examines the time series behavior of competition within Major League Baseball. The above logic would suggest that the reason for the improvement in the competitive balance in MLB is a more equal distribution of playing talent. In the end, the improvement appears to be driven by increased player homogeneity rather than institutional changes.

On voters’ attitudes towards unemployment insurance subsidies across regions: a Canadian simulation

The Canadian unemployment insurance program is designed to reflect the varying risk of joblessness across regions. Regions that are considered low-risk areas subsidize higher-risk ones. A region’s risk is typically proxied by its relative unemployment rate. We use a dynamic, heterogeneous-agent model calibrated to Canada to analyze voters’ preferences between a uniformly generous unemployment insurance and the current system with asymmetric generosity. We find that Canada’s unusual unemployment insurance system is surprisingly close to what voters would choose in spite of the possibilities of shirking and self-insurance through asset buildup.