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.

The association between husbands’ and wives’ labor market positions in the Netherlands

This study describes (1) the association between husbands’ and wives’ employment statuses and occupations in the Netherlands, (2) establishes possible trends in the association, and (3) explores to what extent the association can be attributed to educational homogamy. We use 12 waves of the Dutch Labor Force Survey (1994–2006), and use log-linear models to analyze the associations between the labor market positions of spouses. Overall, we find positive associations, implying that favorable positions are accumulated within households. For couples with children, the association between spouses’ employment status is negative, which means that they divide paid labor. Over birth cohorts, the association between spouses’ employment statuses becomes stronger, and between spouses’ occupational success remains stable. Education is an important contributor to the occupational association, but still half of the association between spouses’ success cannot be attributed to spouses’ education.     

Choices Which Change Life Satisfaction: Similar Results for Australia, Britain and Germany

Using data from national socio-economic panel surveys in Australia, Britain and Germany, this paper analyzes the effects of individual preferences and choices on subjective well-being (SWB). It is shown that, in all three countries, preferences and choices relating to life goals/values, partner’s personality, hours of work, social participation and healthy lifestyle have substantial and similar effects on life satisfaction. The results have negative implications for a widely accepted theory of SWB, set-point theory. This theory holds that adult SWB is stable in the medium and long term, although temporary fluctuations occur due to life events. Set-point theory has come under increasing criticism in recent years, primarily due to unmistakable evidence in the German Socio-Economic Panel that, during the last 25 years, over a third of the population has recorded substantial and apparently permanent changes in life satisfaction (Fujita and Diener in J Pers Soc Psychol 88:158–64, 2005; Headey in Soc Indic Res 85:389–403, 2008a; Headey et al. in Proc Natl Acad Sci USA 107(42):17922–17926, 2010). It is becoming clear that the main challenge now for SWB researchers is to develop new explanations which can account for medium and long term change, and not merely stability in SWB. Set-point theory is limited precisely because it is purely a theory of stability. The paper is based on specially constructed panel survey files in which data are divided into multi-year periods in order to facilitate analysis of medium and long term change.     

Poverty dynamics in eight countries

Despite very different macroeconomic conditions, demographic structures and degrees of income inequality, favorable income changes among low-income families with children were widespread and strikingly similar across the eight countries in our study. In most European countries, the combination of modest inequality and extensive mobility among the poor enabled virtually all families to avoid relative income deprivation at least occasionally. However, even substantial mobility among the poor in the Unites States could not elevate the living standards of one in seven white and two in five black families to a level that was half that enjoyed by a typical American family.This paper is the result of a collaborative research project sponsored by the Rockefeller Foundation, the Russell Sage Foundation and the European Science Foundation as part of its Network on Household Panel Studies. CEPS/INSTEAD provided substantial in-kind support. Deborah Laren provided excellent research assistance. Jos Berghman, Tim Callan, Bengt-Olof Gert, Peter Gottschalk, Pierre Hausman, Bruno Jeandidier, Kjell Janssen, Stephen Jenkins, Anders Klevmarken, Katherine McFate, Udo Neumann, Willard Rodgers, Gaston Schaber, Tim Smeeding, Daniel Stripinis, Hedwig Vermeulen, Wolfgang Voges and Brendan Whelan provided substantial assistance and advice during the course of the project. An earlier version of the paper was presented at the conference Poverty and Public Policy in Paris in January, 1991. The paper was edited by Timothy M. Smeeding, Syracuse University, using two anonymous referees.     

Is There a Trade-Off Between Economic Efficiency and a Generous Welfare State? A Comparison of Best Cases of `The Three Worlds of Welfare Capitalism’

A crucial debate in policy-making as well as academiccircles is whether there is a trade-off betweeneconomic efficiency and the size/generosity of thewelfare state. One way to contribute to this debate isto compare the performance of best cases ofdifferent types of state. Arguably, in the decade198594, the US, West Germany and the Netherlands were best cases best economic performers in whatEsping-Andersen (1990) calls the three worlds ofwelfare capitalism. The US is a liberalwelfare-capitalist state, West Germany a corporatiststate, and the Netherlands is social democratic in itstax-transfer system, although not its labor marketpolicies. These three countries had rates of economicgrowth per capita as high or higher than other richcountries of their `type, and the lowest rates ofunemployment.At a normative or ideological level the three types ofstate have the same goals but prioritise themdifferently. The liberal state prioritises economicgrowth and efficiency, avoids work disincentives, andtargets welfare benefits only to those in greatestneed. The corporatist state aims to give priority tosocial stability, especially household incomestability, and social integration. The socialdemocratic welfare state claims high priority forminimising poverty, inequality and unemployment.Using ten years of panel data for each country, weassess indicators of their short (one year), medium(five year) and longer term (ten year) performance inachieving economic and welfare goals. Overall, in thistime period, the Netherlands achieved the bestperformance on the welfare goals to which it gavepriority, and equalled the other two states on most ofthe goals to which they gave priority. This resultsupports the view that there is no necessary trade-offbetween economic efficiency and a generous welfarestate.The three panel studies are the American Panel Studyof Income Dynamics (PSID), the German Socio-EconomicPanel (GSOEP) and the Dutch Socio-Economic Panel(SEP). They all have samples of over 15,000 and arethe only national panels to have run for tenconsecutive years or more, so making it possible toassess the longer term performance ofwelfare-capitalist states.     

Simple Priorities and Core Stability in Hedonic Games

In this paper we study hedonic games where each player views every other player either as a friend or as an enemy. Two simple priority criteria for comparison of coalitions are suggested, and the corresponding preference restrictions based on appreciation of friends and aversion to enemies are considered. We characterize internally stable coalitions on the proposed domains and show how these characterizations can be used for generating a strict core element in the first case and a core element in the second case. Moreover, we prove that an element of the strict core under friends appreciation can be found in polynomial time, while finding an element of the core under enemies aversion is NP-hard.     

Simple Estimators for Invertible Index Models

This article considers estimation of the unknown linear index coefficients of a model in which a number of nonparametrically identified reduced form parameters are assumed to be smooth and invertible function of one or more linear indices. The results extend the previous literature by allowing the number of reduced form parameters to exceed the number of indices (i.e., the indices are “overdetermined” by the reduced form parameters. The estimator of the unknown index coefficients (up to scale) is the eigenvector of a matrix (defined in terms of a first-step nonparametric estimator of the reduced form parameters) corresponding to its smallest (in magnitude) eigenvalue. Under suitable conditions, the proposed estimator is shown to be root-n-consistent and asymptotically normal, and under additional restrictions an efficient choice of a “weight matrix” is derived in the overdetermined case.     

Has the reciprocal relationship between employment and marriage changed for men? An analysis of the life histories of men born in The Netherlands between 1930 and 1970

The study presented here analyses the reciprocal relationship for men between employment career and union formation and examines whether this relationship changed across twentieth-century birth cohorts. Competing hypotheses about trends are described, using notions of role-specialization, spouse support, and uncertainty. The study is based on an investigation of the life histories of 2,795 men in the Netherlands who were born between the 1930s and the 1960s, and confirms earlier findings by showing that employment fosters marriage while marriage protects men from becoming unemployed. There is also a relationship between employment and cohabitation but it is weaker in both directions. However, the relationship between marriage or cohabitation and occupational mobility is less clear, suggesting that the economic benefits of marriage cannot be generalized to the occupational domain. Although it is commonly believed that the link for men between career and marriage has weakened over time, our comparison of birth cohorts shows that in fact this is not the case.