Tuesday, October 27, 2009

Further to Liam's post below. This is a graph of happiness (on a 1 - 10 scale) from one wave of ESS for Ireland by household income category. Looks pretty flat.


Liam Delaney said...

have a paper on this in current issues of irish journal of psychological medicine. it is pretty flat though statistically significant when you dont include education. the graph even slightly overplays the effect as there are very few people down at the bottom band.

We also find, unsurprisingly perhaps, very strong prediction from using separation as a variable.

I think income dynamics are more important for well-being within a large income range than actual income levels. I studied this for 1994-2001 in Ireland but this is a little limited given that everyone's income was going up! I think there are now a lot of papers showing that people adapt to higher levels of income but there are fewer papers showing what happens when income is reduced by an exogenous shock. We will have plenty of natural experiments for that now in Ireland.

Kevin Denny said...

There is another wave of ESS happening but that won't tell you about dynamics. But it will still be interesting to see if the same cross-section relationship occurs in bad times as well as good.

Liam Delaney said...

We have data on 400 people for this Kevin and goodinformation on how they have been affected by the recession. Going through the preliminary information today.

You can make people very angry by suggesting its not income, particularly if they are under financial pressure but there just isnt convincing evidence from the papers so far that look at with-in country differences.

Kevin Denny said...

I believe you. But we might expect asymmetries between income increases & decreases. I wonder is the hedonic adaption quicker one way or the other? And is there some sort of contagion: is it easier if everyone around you is also losing it because you are not moving down the pecking order?