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Raising Happiness in Poorer Countries: Will Economic Growth Do the Job?

Raising Happiness in Poorer Countries: Will Economic Growth Do the Job?. Richard A. Easterlin October 2011. (With help from Laura Angelescu -McVey, Robson Morgan, Heinz-Henry Noll, Anke Plagnol , Onnicha Sawangfa , Malgorzata Switek , Jacqueline Smith Zweig). 1. Growth and Happiness.

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Raising Happiness in Poorer Countries: Will Economic Growth Do the Job?

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  1. Raising Happiness in Poorer Countries: Will Economic Growth Do the Job? Richard A. Easterlin October 2011 (With help from Laura Angelescu-McVey, Robson Morgan, Heinz-Henry Noll, AnkePlagnol, OnnichaSawangfa, MalgorzataSwitek, Jacqueline Smith Zweig) 1

  2. Growth and Happiness In less developed countries (LDCs) rapid economic growth does not raise the growth rate of Happiness. 2

  3. Growth and Happiness In less developed countries (LDCs) rapid economic growth does not raise the growth rate of Happiness. This finding is the same as that for the developed countries (DCs), and for eastern European countries transitioning from socialism to capitalism (TCs). 2

  4. LDC Evidence Long term trends in: 17 Latin American countries, 1994-2006 (Latinobarometro) 3

  5. LDC Evidence Long term trends in: 17 Latin American countries, 1994-2006 (Latinobarometro) 9 countries, 15-33 years, scattered across three continents (World Values Survey) 3

  6. LDC Evidence Long term trends in: 17 Latin American countries, 1994-2006 (Latinobarometro) 9 countries, 15-33 years, scattered across three continents (World Values Survey) China, 1990-2010 (Real per capita income doubling in less than 10 years) 3

  7. China (1) (urban pop) (total pop) 2000 2005 2010 1990 1995 • (All things considered, how satisfied are you with your life as a whole these days? Please use this card to help with your answer.) World Values Survey, 1990-2007 (scale 1-10) 4

  8. China (2) • (Overall, how satisfied or dissatisfied are you with the way things are going in your life today? Would you say you are: 4 = Very satisfied; 3 = Somewhat satisfied; 2 = Somewhat dissatisfied; 1 = Very dissatisfied?) Gallup, 1997-2004 (1- 4 scale) 5

  9. China (3) 1-10 scale 0-10 scale • (Please imagine a ladder with steps numbered from 0 at the bottom to 10 at the top. Suppose we say that the top of the ladder represents the best possible life for you, and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time?) Gallup, 1999-2010 6

  10. LT Relation Q. If rapid growth of income doesn’t in itself raise happiness, can anything be done to increase happiness? 7

  11. LT Relation Q. If rapid growth of income doesn’t in itself raise happiness, can anything be done to increase happiness?A. Public policy. 7

  12. Some time series evidence from TCs Note: No LT change in Life Satisfaction, 1990-1999 8

  13. Satisfaction with various areas (“domains”) of life: Former GDR (0-10 scale) 1990 1999 Positive changes: (pre-transition)(post-transition)Change Satisfaction with: Environment 3.11 6.47 +3.36 9

  14. Satisfaction with various areas (“domains”) of life: Former GDR (0-10 scale) 1990 1999 Positive changes: (pre-transition)(post-transition)Change Satisfaction with: Environment 3.11 6.47 +3.36 Goods availability 3.16 6.20 +3.04 9

  15. Satisfaction with various areas (“domains”) of life: Former GDR (0-10 scale) 1990 1999 Positive changes: (pre-transition)(post-transition)Change Satisfaction with: Environment 3.11 6.47 +3.36 Goods availability 3.16 6.20 +3.04 Dwelling 6.93 7.36 +0.43 9

  16. Satisfaction with various areas (“domains”) of life: Former GDR (0-10 scale) 1990 1999 Positive changes: (pre-transition)(post-transition)Change Satisfaction with: Environment 3.11 6.47 +3.36 Goods availability 3.16 6.20 +3.04 Dwelling 6.93 7.36 +0.43 Standard of living 6.34 6.63 +0.29 9

  17. Satisfaction with various areas (“domains”) of life: Former GDR (0-10 scale) 19901999 Positive changes: (pre-transition)(post-transition)Change Satisfaction with: Environment 3.11 6.47 +3.36 Goods availability 3.16 6.20 +3.04 Dwelling 6.93 7.36 +0.43 Standard of living 6.34 6.63 +0.29 Household income 5.52 5.61 +0.09 9

  18. Satisfaction with various areas (“domains”) of life: Former GDR (0-10 scale) 1990 1999 Positive changes: (pre-transition)(post-transition)Change Satisfaction with: Environment 3.11 6.47 +3.36 Goods availability 3.16 6.20 +3.04 Dwelling 6.93 7.36 +0.43 Standard of living 6.34 6.63 +0.29 Household income 5.52 5.61 +0.09 And yet… 9

  19. Satisfaction with various areas (“domains”) of life: Former GDR (0-10 scale) Life -0.02 19901999 Positive changes: (pre-transition)(post-transition)Change Satisfaction with: Environment 3.11 6.47 +3.36 Goods availability 3.16 6.20 +3.04 Dwelling 6.93 7.36 +0.43 Standard of living 6.34 6.63 +0.29 Household income 5.52 5.61 +0.09 And yet… Satisfaction 6.57 6.55 9

  20. Satisfaction with various areas (“domains”) of life: Former GDR (Pre-transition) (Post-transition) Negative changes: 19901999Change Satisfaction with: Health 6.62 6.20 -0.42 10

  21. Satisfaction with various areas (“domains”) of life: Former GDR (Pre-transition) (Post-transition) Negative changes: 19901999Change Satisfaction with: Health 6.62 6.20 -0.42 Work 7.23 6.48 -0.75 10

  22. Satisfaction with various areas (“domains”) of life: Former GDR (Pre-transition) (Post-transition) Negative changes: 19901999Change Satisfaction with: Health 6.62 6.20 -0.42 Work 7.23 6.48 -0.75 Childcare 7.54 6.48 -1.06 10

  23. Satisfaction with various areas (“domains”) of life: Former GDR (Pre-transition) (Post-transition) Negative changes: 19901999Change Satisfaction with: Health 6.62 6.20 -0.42 Work 7.23 6.48 -0.75 Childcare 7.54 6.48 -1.06 Net balance 10

  24. Satisfaction with various areas (“domains”) of life: Former GDR Life (Pre-transition) (Post-transition) Negative changes: 19901999Change Satisfaction with: Health 6.62 6.20 -0.42 Work 7.23 6.48 -0.75 Childcare 7.54 6.48 -1.06 Net balance Satisfaction 6.57 6.55 -0.02 10

  25. A check: Satisfaction with various domains of life: Hungary (0-10 scale) Domain19921997Change Standard of living 4.6 4.5 -0.1 Household income 3.6 3.4 -0.2 11

  26. A check: Satisfaction with various domains of life: Hungary (0-10 scale) Domain19921997Change Standard of living 4.6 4.5 -0.1 Household income 3.6 3.4 -0.2 Health 6.4 5.8 -0.6 Home 7.1 6.5 -0.6 Work 7.4 6.7 -0.7 11

  27. Lesson from TCs Money (Material living level) isn’t everything. Public policies regarding Family life, Health, Job Security matter. 12

  28. Does public policy matter? 13

  29. Does public policy matter? Point-of-time test: Compare European countries with similar economic conditions, but different policies – Does Happiness differ? 13

  30. European Countries with Similar Economic Conditions, Different Public Policies Group A: Welfare States - Denmark, Sweden, Finland Group B: France, UK, Germany, Austria 14

  31. Macro-Economic Conditions, Groups A and B, 2007 GDP pc ($,000) 34.3 33.4 Group A Group B 15

  32. Macro-Economic Conditions, Groups A and B, 2007 GDP pc ($,000) 34.3 33.4 Inflation rate (%/yr) 2.1 2.1 Group A Group B 15

  33. Macro-Economic Conditions, Groups A and B, 2007 GDP pc ($,000) 34.3 33.4 Inflation rate (%/yr) 2.1 2.1 Unemp rate (%) 5.6 6.6 Group A Group B 15

  34. Public Policies in Groups A and BBenefit Generosity, 2002 Unemployment Benefit (0-15) 9.9 6.6 Generosity Index (Scruggs) Group A Group B 16

  35. Public Policies in Groups A and BBenefit Generosity, 2002 Unemployment Benefit (0-15) 9.9 6.6 Sickness Benefit (0-15) 11.4 9.2 Generosity Index (Scruggs) Group A Group B 16

  36. Public Policies in Groups A and BBenefit Generosity, 2002 Unemployment Benefit (0-15) 9.9 6.6 Pension Benefit (0-17) 12.5 10.4 Sickness Benefit (0-15) 11.4 9.2 Generosity Index (Scruggs) Group A Group B 16

  37. Public Policies in Groups A and BBenefit Generosity, 2002 Unemployment Benefit (0-15) 9.9 6.6 Pension Benefit (0-17) 12.5 10.4 Overall Benefit (0-47) 33.8 26.2 Sickness Benefit (0-15) 11.4 9.2 Generosity Index (Scruggs) Group A Group B 16

  38. Public Policies in Groups A and BBenefit Generosity, 2002 Unemployment Benefit (0-15) 9.9 6.6 Pension Benefit (0-17) 12.5 10.4 Overall Benefit (0-47) 33.8 26.2 Sickness Benefit (0-15) 11.4 9.2 Income replacement rate* (OECD) 38.0 27.4 Generosity Index (Scruggs) * Di Tella, R., MacCulloch, R.J. and Oswald A.J. (2003). The Macroeconomics of Happiness. The Review of Economics and Statistics, 85(4): 809-827. Group A Group B 16

  39. Public Policies in Groups A and BRespondents’ Ratings of Government Services, (1-10 scale) (In general, how would you rate the quality of each of the following PUBLIC services in [your country]?) 17

  40. Public Policies in Groups A and BRespondents’ Ratings of Government Services, (1-10 scale) (In general, how would you rate the quality of each of the following PUBLIC services in [your country]?) Health 7.4 6.8 Group A Group B 17

  41. Public Policies in Groups A and BRespondents’ Ratings of Government Services, (1-10 scale) Family life (In general, how would you rate the quality of each of the following PUBLIC services in [your country]?) Health 7.4 6.8 Education 7.8 6.6 Group A Group B 17

  42. Public Policies in Groups A and BRespondents’ Ratings of Government Services, (1-10 scale) Family life (In general, how would you rate the quality of each of the following PUBLIC services in [your country]?) Health 7.4 6.8 Care of: childrenelderly 7.6 6.5 6.5 6.0 Education 7.8 6.6 Group A Group B 17

  43. Public Policies in Groups A and BRespondents’ Ratings of Government Services, (1-10 scale) Family life (In general, how would you rate the quality of each of the following PUBLIC services in [your country]?) Health 7.4 6.8 Care of: childrenelderly 7.6 6.5 6.5 6.0 Public pension 6.3 5.1 Education 7.8 6.6 Group A Group B 17

  44. Trust in Government, Groups A and BRespondents’ ratings, 1-10 scale (Please tell me how much you personally trust each of the following institutions.) 18

  45. Trust in Government, Groups A and BRespondents’ ratings, 1-10 scale (Please tell me how much you personally trust each of the following institutions.) Government 6.3 5.0 Group A Group B 18

  46. Trust in Government, Groups A and BRespondents’ ratings, 1-10 scale (Please tell me how much you personally trust each of the following institutions.) Government 6.3 5.0 Political parties 5.7 4.2 Group A Group B 18

  47. Trust in Government, Groups A and BRespondents’ ratings, 1-10 scale (Please tell me how much you personally trust each of the following institutions.) Government 6.3 5.0 Political parties 5.7 4.2 Legal system 7.4 5.8 Group A Group B 18

  48. Satisfaction with Work, Health, Family LifeGroups A and B, 2007 (scale 1-10) (Could you please tell me … how satisfied you are with each of the following items…) 19

  49. Satisfaction with Work, Health, Family LifeGroups A and B, 2007 (scale 1-10) (Could you please tell me … how satisfied you are with each of the following items…) Work 8.0 7.2 Group A Group B Group A: Denmark, Sweden, Finland Group B: France, UK, Germany, Austria 19

  50. Satisfaction with Work, Health, Family LifeGroups A and B, 2007 (scale 1-10) (Could you please tell me … how satisfied you are with each of the following items…) Work 8.0 7.2 Health 7.9 7.4 Group A Group B Group A: Denmark, Sweden, Finland Group B: France, UK, Germany, Austria 19

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