Deaton, A. (2005). Measuring poverty in a growing world (or measuring growth in a poor world). Review of Economics and statistics, 87(1), 1-19.

The extent to which growth reduces global poverty has been disputed for 30 years. Although there are better data than ever before, controversies are not resolved. A major problem is that consumption measured from household surveys, which is used to measure poverty, grows less rapidly than consumption measured in national accounts, in the world as a whole and in large countries, particularly India, China, and the United States. In consequence, measured poverty has fallen less rapidly than appears warranted by measured growth in poor countries. One plausible cause is that richer households are less likely to participate in surveys. But growth in the national accounts is also upward biased, and consumption in the national accounts contains large and rapidly growing items that are not consumed by the poor and not included in surveys. So it is possible for consumption of the poor to grow less rapidly than national consumption, without any increase in measured inequality. Current statistical procedures in poor countries understate the rate of global poverty reduction, and overstate growth in the world.

 

 

Deaton, A. (2005). Measuring poverty in a growing world (or measuring growth in a poor world). Review of Economics and statistics, 87(1), 1-19.

https://doi.org/10.1162/0034653053327612

 

 

Alesina, A., &La Ferrara, E. (2005). Preferences for redistribution in the land of opportunities. Journal of public Economics, 89(5-6), 897-931.

This paper explores how individual preferences for redistribution depend on future income prospects. In addition to estimating the impact of individuals’ socioeconomic background and of their subjective perceptions of future mobility, we employ panel data to construct ‘objective’ measures of expected gains and losses from redistribution for different categories of individuals. We find that such measures have considerable explanatory power and perform better than ‘general mobility’ indexes. We also find that preferences for redistribution respond to individual beliefs on what determines one’s position in the social ladder. Ceteris paribus, people who believe that the American society offers ‘equal opportunities are more averse to redistribution.

 

 

Alesina, A., &La Ferrara, E. (2005). Preferences for redistribution in the land of opportunities. Journal of public Economics, 89(5-6), 897-931.

https://doi.org/10.1016/j.jpubeco.2004.05.009

 

 

Graham, C. (2005). Insights on Development from the economics of happiness. The World Bank Research Observer, 20(2), 201-231.

The literature on the economics of happiness in developed economies finds discrepancies between reported measures of well-being and income measures. One is the so-called Easterlin paradox: that average happiness levels do not increase as countries grow wealthier. This article explores how that paradox—and survey research on reported well-being in general—can provide insights into the gaps between standard measures of economic development and individual assessments of welfare. Analysis of research on reported well-being in Latin America and Russia finds notable discrepancies between respondents’ assessments of their own well-being and income- or expenditure-based measures. Accepting a wide margin for error in both types of measures, the article posits that taking such discrepancies into account may improve the understanding of development outcomes by providing a broader view on well-being than do income- or expenditure-based measures alone. It suggests particular areas where research on reported well-being has the most potential to contribute. Yet the article also notes that some interpretations of happiness research—psychologists’ set point theory, in particular—may be quite limited in their application to development questions and cautions against the direct translation of results of happiness surveys into policy recommendations.

 

 

Graham, C. (2005). Insights on Development from the economics of happiness. The World Bank Research Observer, 20(2), 201-231.

https://doi.org/10.1093/wbro/lki010  

 

Goldsmith, A. H., Veum, J. R., &William Jr, D. (1996). The impact of labor force history on self-esteem and its component parts, anxiety, alienation and depression.

Psychologists Erikson (1959), Jahoda (1979, 1981, 1982) and Warr (1987) have offered theories to explain how experiences such as joblessness may lead to a decline in mental health. Other psychologists, including Rotter (1966) and Rosenberg (1965), have designed and validated survey instruments capable of measuring various aspects of emotional health including self-esteem. Using such construct measures the correlation between unemployment and self-esteem has been estimated. Unfortunately, the accuracy of these estimates is marred by three statistical problems: omitted variables, unobserved heterogeneity, and data selection. Therefore, the failure of a consensus to emerge regarding the impact of unemployment on self-esteem is not surprising.

This paper offers new estimates of the relation between unemployment and self-esteem using a methodology that controls for the three potential sources of bias identified. The data are drawn from the U.S. National Longitudinal Survey of Youth which provides detailed information on the personal characteristics of individuals in the sample, including their self-esteem, as well as their labor force experiences.

We find clear evidence that having recently completed a spell of joblessness, due either to unemployment or time spent out of the labor force, damages an individual’s perception of self-worth. Exposure to bouts of both forms of joblessness also significantly harms self-esteem, and the effect of such exposure persists. Our decompositional analysis suggests that joblessness damages self-esteem by generating feelings of depression. Clearly, policies designed to lessen joblessness will also yield a psychologically healthier labor force.

 

 

Goldsmith, A. H., Veum, J. R., &William Jr, D. (1996). The impact of labor force history on self-esteem and its component parts, anxiety, alienation and depression. Journal of Economic Psychology, 17(2), 183-220.

https://doi.org/10.1016/0167-4870(96)00003-7

 

 

Riis, J., et al. (2005). Ignorance of Hedonic Adaptation to Hemodialysis: A Study Using Ecological Momentary Assessment.

Healthy people generally underestimate the self-reported well-being of people with disabilities and serious illnesses. The cause of this discrepancy is in dispute, and the present study provides evidence for 2 causes. First, healthy people fail to anticipate hedonic adaptation to poor health. Using an ecological momentary assessment measure of mood, the authors failed to find evidence that hemodialysis patients are less happy than healthy nonpatients are, suggesting that they have largely, if not completely, adapted to their condition. In a forecasting task, healthy people failed to anticipate this adaptation. Second, although controls understated their own mood in both an estimation task and a recall task, patients were quite accurate in both tasks. This relative negativity in controls’ estimates of their own moods could also contribute to their underestimation of the moods and overall well-being of patients.

 

 

Riis, J., Loewenstein, G., Baron, J., Jepson, C., Fagerlin, A., & Ubel, P. A. (2005). Ignorance of Hedonic Adaptation to Hemodialysis: A Study Using Ecological Momentary Assessment. Journal of Experimental Psychology: General, 134(1), 3-9.

http://dx.doi.org/10.1037/0096-3445.134.1.3  

Van de Stadt, H., Kapteyn, A., &Van de Geer, S. (1985). The relativity of utility: Evidence from panel data. The review of Economics and Statistics, 179-187.

The paper addresses the question whether utility may be viewed as a completely relative concept. In a dynamic setting this means that one has to model both habit formation and utility interdependence. The resulting model contains unobservable variables and requires panel data to be estimated. Using the first two waves of an annual panel in The Netherlands, different specifications of the model are estimated, involving alternative sets of identifying restrictions. It turns out that the data are compatible with the hypothesis that utility is completely relative, but we cannot exclude the possibility that utility is partly relative and partly absolute.

 

 

Van de Stadt, H., Kapteyn, A., &Van de Geer, S. (1985). The relativity of utility: Evidence from panel data. The review of Economics and Statistics, 179-187. 

DOI: 10.2307/1924716  

Easterlin, R. A. (2000). The worldwide standard of living since 1800. Journal of Economic Perspectives, 14(1), 7-26.

By many measures a revolution in living conditions is sweeping the world. Most people today are better fed, clothed, and house than their predecessors two centuries ago. They are healthier, live longer, and are better educated. Women’s lives are less centered on reproduction, and political democracy has gained a foothold. Current international differences in a number of standard of living indicators are significantly correlated. Historically, however, these improvements often started at quite different times, suggesting that the determinants of change in different aspects of the standard of living are varied.

 

 

Easterlin, R. A. (2000). The worldwide standard of living since 1800. Journal of Economic Perspectives, 14(1), 7-26.

https://doi.org/10.1257/jep.14.1.7

 

 

Clark, A. E., &Oswald, A. J. (1998). Comparison-concave utility and following behaviour in social and economic settings.

This paper describes a theory of rational emulation and deviance. It assumes that individuals care about relative position (or `status’), and constructs a model of decision-making in social and economic settings. The analysis shows why individuals who want to be different from others will, paradoxically, find it rational to imitate other people. The paper also provides a choice-theoretic foundation for a number of ideas in the social psychology and economics literatures. The central point of the paper is that concern about relative position or rank is, by itself, insufficient to bring about emulation. The reaction of an individual to others’ behaviour depends crucially on the curvature of the comparison term in their utility function: individuals with comparison-concave utility follow others while those with comparison-convex utility act deviantly.

 

 

Clark, A. E., &Oswald, A. J. (1998). Comparison-concave utility and following behaviour in social and economic settings. Journal of Public Economics, 70(1), 133-155.

https://doi.org/10.1016/S0047-2727(98)00064-4

 

 

Clark, A. E., &Oswald, A. J. (1996). Satisfaction and comparison income. Journal of public economics, 61(3), 359-381.

This paper attempts to test the hypothesis that utility depends on income relative to a ‘comparison’ or reference level. Using data on 5,000 British workers, it provides two findings. First, workers’ reported satisfaction levels are shown to be inversely related to their comparison wage rates. Second, holding income constant, satisfaction levels are shown to be strongly declining in the level of education. More generally, the paper tries to help begin the task of constructing an economics of job satisfaction.

 

 

Clark, A. E., &Oswald, A. J. (1996). Satisfaction and comparison income. Journal of public economics, 61(3), 359-381.

https://doi.org/10.1016/0047-2727(95)01564-7