The OECD and Well-being

The OECD is organising a conference in Paris on 12 October 2011 on "Two Years after the Stiglitz-Sen-Fitoussi Report":

http://www.oecd.org/site/0,3407,en_21571361_48428993_1_1_1_1_1,00.html

Some interesting OECD related links:
Better Life Initiative: http://www.oecdbetterlifeindex.org/
Measuring Progress: www.oecd.org/measuringprogress
wikiprogress: http://www.wikiprogress.org/

The Stiglitz-Sen-Fitoussi Report is very much a must-read on the topic: http://www.stiglitz-sen-fitoussi.fr/documents/rapport_anglais.pdf

Krueger and Muller: Unemployment and Wellbeing

Really important paper below by Krueger and Muller on unemployment and well-being. This type of research is vital to understand for those designing the new unemployment benefit and job assistance system in Ireland. It provides the most detailed account of how people actually feel and behave during the course of unemployment and offers the potential for the development of a humane, enabling and evidence-based unemployment policy.

Job Search, Emotional Well-Being and Job Finding in a Period of Mass Unemployment: Evidence from High-Frequency Longitudinal Data

Abstract
This paper presents findings from a survey of 6,025 unemployed workers who were interviewed every week for up to 24 weeks in the fall of 2009 and winter of 2010. Our main findings are: (1) the amount of time devoted to job search declines sharply over the spell of unemployment; (2) we do not observe a rise in job search or job finding around the time Unemployment Insurance (UI) benefits expire; (3) unemployed workers express much dissatisfaction and unhappiness with their lives, and their unhappiness rises the longer they are unemployed; (4) the unemployed appear to be particular sad during episodes of job search, and they find job search more depressing over the course of unemployment; (5) in the Great Recession the exit rate from unemployment was low at all durations, and declined gradually over the spell of unemployment; and (6) the amount of time devoted to job search and the reservation wage help predict early exits from Unemployment Insurance (UI).

Measuring WellBeing: What Matters to You?

From NEF website below:

Measuring National Well-Being: What matters to you?
Wednesday, 23 March, 2011 - 18:00 - 19:30
Cambridge Judge Business School and the Well-Being Institute, University of Cambridge host a debate on the measurement of national well-being on behalf of the Office for National Statistics. Nic Marks, founder of the Centre for Well-being at nef, will be speaking.


The Office for National Statistics is developing a set of measures of national well-being to complement economic measures - such as Gross Domestic Product (GDP) - that until now have underpinned evaluations of ‘how the UK is doing’. The argument is that national well-being cannot be understood by looking at economic measures alone. There is growing demand for wider measures of progress and a more complete picture of ‘how society is doing’.

The National Statistician has launched a nationwide debate with the aim of understanding the dimensions and key features of national well-being – or, more simply, determining what things matter to people. Although there are some existing objective measures that may help understand national well-being (for example around health, education, employment and crime), it seems equally important to understand subjective measures of well-being (how we experience our lives, e.g. how happy and fulfilled we are) – but there is no consensus, and very little available data on such measures. The national debate aims to identify and elaborate key themes that will help to develop credible, robust measures of individual and national well-being, for use in future surveys.

The Cambridge event will take the form of a ‘Question Time’ debate, chaired by the BBC’s Claudia Hammond. Panellists will be:

Jen Beaumont, Social Trends Branch Head, Office for National Statistics
Andrew Gamble, Professor of Politics, Head of Department of Politics and International Studies & Associate Fellow of the Centre for Science and Policy, University of Cambridge
David Halpern, Director, Behavioural Insights Team, Cabinet Office
Felicia Huppert, Professor of Psychology & Director of the Well-Being Institute, University of Cambridge
Simon Learmount, Director of the Executive MBA, Judge Business School, University of Cambridge
Nic Marks, Founder of the Centre for Well-Being, Fellow at the new economics foundation
This is a public event for which you can register at here. You are warmly encouraged to contribute your views and ideas as part of the national debate; you can either submit questions in advance when registering or raise issues from the floor. Please note there is very limited parking at the venue.

The debate and reception is being sponsored by the Cambridge Executive MBA programme.

NEF: Measuring our Progress

The New Economics Foundation recently released a report entitled "Measuring our Progress: The Power of Wellbeing" The executive summary and a copy of the report is available at the link

Measuring our Progress: The power of well-being

For nearly a decade, the Centre for Well-being at nef has been calling for governments to measure people's well-being and to recognise that the economy - and economic growth in particular - is only ever a means to an end. Now there is growing interest in measuring and using well-being for policy amongst governments and official bodies in the UK, France, the European Union, the United Nations and the OECD. This report presents nef's contribution to the current debate about how well-being can be measured and how the data can be used to bring about more effective policy-making.

Clark and Oswald NBER: International Happiness

International HappinessAuthor info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
David G. Blanchflower
Andrew J. Oswald

Additional information is available for the following registered author(s):

Andrew J. Oswald
Abstract

This paper describes the findings from a new, and intrinsically interdisciplinary, literature on happiness and human well-being. The paper focuses on international evidence. We report the patterns in modern data; we discuss what has been persuasively established and what has not; we suggest paths for future research. Looking ahead, our instinct is that this social-science research avenue will gradually merge with a related literature -- from the medical, epidemiological, and biological sciences -- on biomarkers and health. Nevertheless, we expect that intellectual convergence to happen slowly.

Grattan Institute Event on Well-Being

Thanks to Colm for sending a link to the details of a recent event on well-being held by the Grattan Insitute in Melbourne.

Around the world governments are recognising that there is more to life – and government – than GDP. The Australian Government Treasury has developed a “wellbeing” framework for evaluating policy and outcomes, and the Australian Bureau of Statistics has developed a project named “Measures of Australia’s Progress”. Both aim to broaden the objectives and measures of government beyond purely economic indicators.

These developments, and how public policy in Australia might change as a result, was discussed by Dr Ken Henry, Secretary to the Treasury, Don Henry, CEO, Australian Conservation Foundation and Gemma Van Halderen, Social Data Integration and Analysis Branch, Australian Bureau of Statistics.

This is the last in a series of three seminars about social and environmental measures for public policy. The panel discussed how wellbeing frameworks are already being used in Practice in Australia, how they might develop, and how they might influence the future development of public policy.

This seminar was presented by Grattan Institute, in conjunction with the McCaughey Centre, the Centre for Public Policy of the University of Melbourne and Trinity College.

Rich and Unhappy

An interesting story has been running around the economics blogs for the last day (summarised here on Marginal Revolution) about the reaction to an article by a Chicago Law Professor complaining about how difficult it is to live in America even on family incomes like his own in excess of 400 thousand dollars. We have had a few incidents like this in Ireland over the years, most famously when an EU Commissioner complained about his 6 figure salary on the main national talk show, inviting the audience to try living like him for a while and see how they would manage it. A lot of the reaction is the standard hysteria you expect when someone writes something like that though there is also quite a big reaction defending him in the comments on the article. There are also a lot of very interesting attempts to analyse why it would be the case that a guy earning this type of money would feel hard done by.

A number of the explanations focus on the idea that even a wealthy guy like the Professor may feel relatively poor in a society with so many extremely rich people. For me, deLong gives a great description of why, in general, the individual relationship between income and well-being is not as high as we would expect. An excerpt is below but the full post is really worth reading. DeLong emphasises habituation and reference effects as the two main reasons for why someone like the Professor is feeling hard done by. If I were to add anything to the analysis, it would be that loss aversion with respect to changes are at least partly at play. Also, he clearly doesn't like how the government spends money in the US. Perception that you are being unfairly taxed to fund activity of low-value is a potential driver of life satisfaction. Though, it is also a strategic emotion and hard to know whether it actually causes dissatisfaction or emerges from it.

By any standard, they are really rich.

But they don't feel rich. They have a cash flow problem. When the bills are paid at the end of the month, the money is gone--and they feel that they have to scrimp.

I know how they feel. My household income is of the same order of magnitude than theirs (although somewhat less) and we too had to juggle assets quickly when it developed that an error in Reed College's housing system had caused them not to charge us $5,000 that we owe. We too have chosen to put our income in places (tax-favored retirement savings vehicles, building equity, housing, private college costs) where we think it is better used than $200 restaurant meals, $1000 a night resort hotel rooms, or $75,000 automobiles. But I don't think that I am not rich.

Professor Henderson's problem is that he thinks that he ought to be able to pay off student loans, contribute to retirement savings vehicles, build equity, drive new cars, live in a big expensive house, send his children to private school, and still have plenty of cash at the end of the month for the $200 restaurant meals, the $1000 a night resort hotel rooms, and the $75,000 automobiles. And even half a million dollars a year cannot be you all of that.

But if he values the high-end consumption so much, why doesn't he rearrange his budget? Why not stop the retirement savings contributions, why not rent rather than buy, why not send the kids to public school? Then the disposable cash at the end of the month would flow like water. His problem is that some of these decisions would strike him as imprudent. And all of them would strike him as degradations--doctor-law professor couples ought to send their kids to private schools, and live in big houses, and contribute to their 401(k)s, and also still have lots of cash for splurges. That is the way things should be.

But why does he think that that is the way things should be? And here is the dirty secret: Professor Henderson thinks that that is the way things should be because he knows people for whom that is the way it is.

Unemployment and Well-Being

I am currently reading through detailed transcripts of 13 focus group interviews with 100 or so people claiming unemployment benefits interviewed by Michael Egan and others as part of our IRCHSS-funded wellbeing study. I am not going to go in detail through the results as we are coding them up (along with Nicola O'Connell who works in Geary also) to present and publish them in Autumn. It is not surprising perhaps that a sense of despair hangs over many of the interviews. In general, the link between wellbeing and unemployment is one of the great puzzles of behavioural economics. The effects are, always and everywhere, enormous and poorly explained by any standard economic measures. To the very best of my knowledge, no paper has offered a convincing explanation based on financial variables alone as to why unemployment generates such substantial negative effects on well-being.

A standard OLS life satisfaction regression from the European Social Survey round 4 data collected in Ireland this year and last year confirms the basic picture.  Life Satisfaction is a simple 0 to 10 variable. The bottom two categories are unemployed and actively seeking employment, and unemployed and not actively seeking employment, respectively; Health is a one-to-five variable going from 1 excellent to 5 poor; discussint is the abscence of someone to discuss intimate problems with; gender is 1 if female and 0 if male; yearseduc-n is years of education; the base category for marital status is married and the categories are separated, divorced, widowed, never married, refused. (Results very similar for ordered logit).

      Source |       SS       df       MS              Number of obs =    1759
-------------+------------------------------           F( 23,  1735) =   10.71
       Model |  980.111862    23  42.6135592           Prob > F      =  0.0000
    Residual |  6902.76364  1735  3.97853812           R-squared     =  0.1243
-------------+------------------------------           Adj R-squared =  0.1127
       Total |   7882.8755  1758  4.48400199           Root MSE      =  1.9946

------------------------------------------------------------------------------
     lifesat |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]
-------------+----------------------------------------------------------------
         age |  -.0802745   .1510821    -0.53   0.595    -.3765967    .2160477
      gender |  -.0723667    .100566    -0.72   0.472      -.26961    .1248766
      health |  -.5741351   .0627302    -9.15   0.000    -.6971698   -.4511004
discussint~e |  -.5104372   .1702542    -3.00   0.003    -.8443623   -.1765122
yearseduca~n |   -.019549   .0133266    -1.47   0.143    -.0456868    .0065889
_Imaritals~2 |   -.737398   .2325077    -3.17   0.002    -1.193423   -.2813732
_Imaritals~3 |  -.4806907   .3412548    -1.41   0.159    -1.150005    .1886233
_Imaritals~4 |   .4508631   .1857378     2.43   0.015     .0865694    .8151567
_Imaritals~5 |  -.4225155   .1263595    -3.34   0.001    -.6703484   -.1746826
_Imaritals~6 |   1.195028   1.426421     0.84   0.402    -1.602658    3.992713
unem~dactive |  -1.393972   .1867193    -7.47   0.000    -1.760191   -1.027754
unem~tactive |  -1.400559   .3045898    -4.60   0.000    -1.997961   -.8031574
_Ihousehol~2 |  -.0413669   .2408005    -0.17   0.864    -.5136567    .4309229
_Ihousehol~3 |  -.1167114   .2513269    -0.46   0.642    -.6096469    .3762241
_Ihousehol~4 |   .0581281   .2567047     0.23   0.821    -.4453551    .5616113
_Ihousehol~5 |   .0213614   .2638449     0.08   0.935    -.4961261     .538849
_Ihousehol~6 |  -.1041712    .273291    -0.38   0.703    -.6401856    .4318432
_Ihousehol~7 |   .1653532    .286897     0.58   0.564    -.3973471    .7280535
_Ihousehol~8 |   .1252994   .2952895     0.42   0.671    -.4538615    .7044603
_Ihousehol~9 |   .0509964   .3324416     0.15   0.878    -.6010321    .7030249
_Ihouseho~10 |   .2078842   .3228671     0.64   0.520    -.4253654    .8411338
_Ihouseho~20 |  -.0254768   .2892778    -0.09   0.930    -.5928467    .5418932
_Ihouseho~21 |   .1244626   .2963733     0.42   0.675    -.4568239     .705749
       _cons |   9.529465    .475546    20.04   0.000     8.596761    10.46217
------------------------------------------------------------------------------

Addendum 1: I have added household income into the specification.The base category is bottom decile. 20 and 21 are missing income flags.

This is one of the most important topics for policy during this current recession,  both in straight-forward human terms as this is one of the clearest sources of distress that emerges from a collapsed economy and also in terms of general economic welfare. The complete sense of despair and uncertainty and the shattering of confidence that appears to follow soon after redundancy for many people is a major trigger of more long-run negative consequences of recession. It is one of the main sites where economics, psychology and other disciplines need to be engaged to generate more convincing explanations with more practical solutions. It is really frustrating to think that we have advanced so far in many different ways yet our response to unemployment seems identical to that of the 1980s and is having a predictably strangling effect on people.

Frey and Stutzer - Happiness and Public Choice.

Happiness and Public Choice 

Bruno S. Frey^{1, 2}  and Alois Stutzer^{2, 3}

(1)	Institute for Empirical Research in Economics, University of Zurich, Winterthurerstrasse 30, 8006 Zurich, Switzerland

(2)	CREMA—Center for Research in Economics, Management and the Arts, 4052 Basel, Switzerland

(3)	University of Basel, Basel, Switzerland

Received: 20 April 2010  Accepted: 9 June 2010  Published online: 2 July 2010

Abstract  

Measuring individual welfare using data on reported subjective well-being has made great progress. It offers a new way of confronting public choice hypotheses with field data, e.g., with respect to partisan preferences or rents in the public bureaucracy. Insights from public choice also help to assess the role of happiness measures in public policy. We emphasize that maximizing aggregate happiness as a social welfare function neglects incentive problems and political institutions while citizens are reduced to metric stations. The goal of happiness research should be to improve the nature of the processes through which individuals can express their preferences.

Keywords  Economic policy - Happiness - Life satisfaction - Public choice - Social welfare

Depression and Income

nice post on depression and income on the Economix blog, and the potential difficulties in analysing this relationship.

link here

NESC Report on Well-Being

The NESC Well-Being reports are available below. These are lengthy documents with many useful references. I think there needs to be a parallel academic debate in Ireland about the measurement of well-being and an assessment of the public policy factors contributing to well-being and the alleviation of psychological distress. One potential problem with the NESC reports is that they crystallise well-being as a political and social agenda rather than an active and contested area of research. This is perhaps their aim but we should remember that there is still a lot to play for from a research perspective in this field and also well-being doesnt neccesarily imply more government and more regulation.

Volume 1

Volume 2

Some concrete suggestions I would have include:

- presenting aggregate suicide statistics masks the huge heterogeneity in suicide trends among different age-groups. The increase in young suicides over the course of the Celtic Tiger was frightening and still one of the great puzzles of the period from a well-being perspective

- people need to make more and better use of the freely available ESS data. some colleagues and I have written some papers on the well-being and social capital aspects but it is a vastly underutilised data resource.

- as the authors point out, Ireland was not in the first round of SHARE and as such the time-use data for Ireland is not in the current SHARE volumes. But the data is now fully available including for Ireland so pursuing this analysis will be interesting.

- Our most promising line of research has been working on developing the day reconstruction measurement paradigms initiated by Kahneman and colleagues. Some of our papers and references to the wider literature are below

The website for our well-being projects is available below and the link to my lecture series on behavioural economics and public policy is below that. I think behavioural economics is currently providing a potential bridge between economic policy and well-being measurement.

http://geary.ucd.ie/wellbeing
http://geary.ucd.ie/econpsych