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The Economics of Happiness FRANCIS MUNIER University of Strasbourg France [email protected] Room 141

Economy of Happiness Course PPTe

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Page 1: Economy of Happiness Course PPTe

The Economics of Happiness

FRANCIS MUNIER

University of Strasbourg France

[email protected]

Room 141

Page 2: Economy of Happiness Course PPTe

Cloud of relevant words…

Psychology Modernity Buthan GNH Economy

Paradox of Progress Policies Quality of Life Philosophy

HAPPINESS Stieglitz/ Sen Report

IndividualCountries Measure International

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Today, it is not just perfectly legitimate to pursue happiness, but not being happy, or at least not seeming to be, is even a problem to be avoided.

To show sadness or a negative attitude is a sign of social failure.

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INTRODUCTION

Easterlin Paradox (1974)

“Does economic growth improve the human lot? Some empirical evidence” as heralding the beginning of this field of research

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INTRODUCTION

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INTRODUCTION

“We live in a favored age and yet we do not feel favored.”

Gregg Easterbrook (2003) The Progress Paradox: How Life Gets Better While People Feel Worse, Random House; 1st edition

Why economic progress, both of which justify themselves on the grounds that they produce the greatest happiness for the greatest number, leave so much dissatisfaction in their wake ?

Ruut Veenhoven (1993) Happiness in Nations, Subjective appreciation of life in 56 nations 1946-1992, Erasmus University Rotterdam

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INTRODUCTION

Why is happiness important?

Difference between poor and rich people

Difference between young and old people

Difference between men and women

Difference between nationals and foreigners

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INTRODUCTION

It is then important to know how and why happiness has changed over time.

In this way, we are able also to give some answers about the decline (or not) of happiness…

Is it true that people get more and more unhappy (pessimists) or do people get happier all the time (optimists claim) ?

Increase of wealth (even Real GDP of capita) versus happiness

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INTRODUCTION

Is it true that people in underdeveloped countries are quite happy despite their low real per capita income?

Or is this view just a romantic notion that does not take into account the hardship imposed by low income.

Cross-country comparison of subjective happiness

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INTRODUCTION

Economy of Happiness leads to many central questions :

How important is wealth to happiness ?

The rate of unemployment? The rate of economic

growth? Job satisfaction? Leisure time? How important is

marriage? Parenthood? Health? Democratic institutions? Social safety nets ?

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INTRODUCTION

How do various factors such as economic growth, unemployment and inflation, as well as institutional variables, affect individual well-being?

Are people who buy new products happier than the others who are not able / who do not want to buy these new products?

Can we find a correlation between happiness and GDP?

Are people with a higher income happier than those who earn less?

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INTRODUCTION

It may appear obvious to ask these kinds of questions, but until recently economists, for the most part, ignored them.

Therefore, today’s interest in this area constitutes a real revolution in the field of economics

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COURSE SCHEDULE

I. Some glimpses of Economy of Happiness

a. Salient facts on happiness b. GDP and happiness c. How does income affect

happiness? d. How does unemployment and

inflation affect happiness?

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COURSE SCHEDULE

II. International Comparisons

a. Example of rankings b. The better life index c. How to interpret these

international comparisons of happiness?

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COURSE SCHEDULE

III. Happiness and Creativity

a. Creativity, Growth, nudge : the case of Shanghai

b. Creative Class, Post-modernism and happiness of Nations

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Test - Topic of report

Final test : (50% of the grade)

Report and oral presentation around 10 pages (guideline) : 50%

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• The big question: what is happiness ? • As old as mankind itself

• Philosophy try to define what a good and happy life is

Eudaimonia versus hedoniaEudaimonism / hedonism (homo

oeconomicus )

Some glimpses of Economy of Happiness Salient facts on happiness

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Some glimpses of Economy of Happiness Salient facts on happiness

Differences between Hedonic and Eudaimonic well-being

Life satisfaction (Hedonia) versus Personal growth (eudaimonia)

Happiness (Hedonia) versus Inspiration (Eudaimonia) Pleasure (Hedonia) versus Good life (Eudaimonia) Joy (Hedonia) versus Engagement, interest, flow

(Eudaimonia)

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Some glimpses of Economy of Happiness Salient facts on happiness

HEDONIA

Focuses on Happiness (Kahneman, Diener & Schwarz, 1999)

Well-being defined by pleasure attainment and pain avoidance

Subjective well-being consist of three dimensions Life satisfaction Presence of positive moods Absence of negative moods

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Some glimpses of Economy of Happiness Salient facts on happiness

EUDAIMONIA

Well-being defined degree by which a person is fully functioning

To lives in accordance to ones « daimons » (Socrates) Happiness – good life is more than pleasure

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Socrates : Eudaimonia (being good, happy life)

Happiness is a virtuous life Happiness can not exist

without a fair conduct of life. knowledge are guides to identify what is good.

The happier lives therefore is linked to wisdom.

Plato : true happiness is the contemplation of eternal ideas.

Be friends with yourself

Some glimpses of Economy of Happiness Salient facts on happiness

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Aristotle : Health, wealth, beauty, virtuous life and power are the steps needed to achieve a happy life

Friendship is essential to a happy life

Epicure : Teleological conception of happiness.

Only necessary desires lead to happiness (drinking, eating).

Epictete : We must break free of the passions to achieve happiness. Do not expect that events happen as you wish, decide to try what happens and you are happy.

Some glimpses of Economy of Happiness Salient facts on happiness

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Montaigne : Looking for pleasure, disdain of sadness. The search for happiness is to come to accept reality and cultivate “vivre à propos”.

Spinoza : Breaking free of the passions. Development of the well-being through knowledge

Schopenhauer : Individual is subjected to the tyranny of the will. Lose themselves in contemplation and asceticism for inner peace

Some glimpses of Economy of Happiness Salient facts on happiness

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Some glimpses of Economy of Happiness Salient facts on happiness

Budhism, Confucianism, Islamism, taoism, etc.

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Some glimpses of Economy of Happiness Salient facts on happiness

Psychologists try to understand what particulars ingredients and circumstances make people happy or unhappy

Positive psychology is a recent branch of psychology Positive psychologists seek "to find and nurture genius and talent", and "to make normal life more fulfilling", not simply to treat mental illness.

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There is no consensus about what happiness is

It means different things for different people

Everyone can define for himself what is happiness

May be it is the ultimate goal in life

Some authors disagree about happiness being the ultimate goal of human life…

it is just one ingredient in the recipe for a good life

For example, different ultimate goals have been distinguished with no possibility to merge and or to be subordinate.

Some glimpses of Economy of Happiness Salient facts on happiness

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Subjective well-being (another term of happiness)

Human development (including virtue)

Justice Companionship Freedom Others consider that a large

set of factors is important in addition to happiness

Trust, self-esteem, absence of pain, satisfaction with one’s work, family life and marriage

Some glimpses of Economy of Happiness Salient facts on happiness

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In addition with these outcomes, procedural aspects may play a significant role

Most person derive great pleasure from engaging, challenging activities.

The emphasis on process rather than outcomes has been called the flow aspect of life (theory of flow by mihaly csikszentmihalyi)

http://www.ted.com/talks/mihaly_csikszentmihalyi_on_flow#

Some glimpses of Economy of Happiness Salient facts on happiness

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Because happiness is an elusive concept, it makes little sense to proceed by trying to define what happiness is

Is it may be more relevant to ask the individuals how happy they feel themselves to be

They are the best jugdes of when they are happy or unhappy

Some glimpses of Economy of Happiness Salient facts on happiness

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Concepts of Happiness

It is also useful to look at two polar concepts of happiness: subjective and objective happiness

Some glimpses of Economy of Happiness Salient facts on happiness

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Some glimpses of Economy of Happiness Salient facts on happiness

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Explaining the Psychological Mechanisms Producing Happiness

Subjective well-being is an attitute consisting of the two basic aspects of cognition and affect.

Affect : mood and emotions…instant evaluation of the events that occur in their lives.

Cognitive : rational or intellectual aspects. It involves a component of judgment and

comparison

Some glimpses of Economy of Happiness Salient facts on happiness

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Subjective well-being, happiness, satisfactionPhysiological and neurobiological indicators : brain

waves but of course no practical indicatorsObserved social behavior : Happy person acts more

as high activity level, outgoing actions, friendlinessNon verbal behavior : relationship between

frequent smiling in social interactions or enthusiastic body of movements and happiness…

but some actions is sometimes undertaken by unhappy persons…

difficult to judge a person’s well being.

Some glimpses of Economy of Happiness Salient facts on happiness

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Happiness is thus not given and immutable, but is constructed within the person concerned and largely depends on the social environment

Even that genes : 60%

Some glimpses of Economy of Happiness Salient facts on happiness

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The determinants of happinessPersonality factors : self-esteem, personal control,

optimism,…Socio-demographic factors: age, gender, marital

status, educationEconomic factors : individual and aggregate income,

unemployment, inflationContextual and situational factors : working

conditions, stress involved at the workplace, interpersonal relations with colleagues, relatives, friends, marriage partner, living conditions, health

Institutional factors : the rights, freedom, etc.

Some glimpses of Economy of Happiness Salient facts on happiness

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Some glimpses of Economy of Happiness Salient facts on happiness

There are four psychological processes:

Adaptation : new circumstances and need to adjust their subjective level of well-being

Hedonic adaptation reduces individuals’ responsiveness to repeated or continued stimulus

The case of people who win the lottery for exemple

Hedonic Treadmill

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Some glimpses of Economy of Happiness Salient facts on happiness

Aspiration : People evaluate their situation with regard to an aspiration level that is formed by their hopes and expectations

Usually, aspiration levels are closely correlated with current or past attainments.

Social comparison : People compare their positions with those of relevant other persons

Importance of the relative income

Depend also to the environnement : people are less happy when they don’t have a job, but the unhappiness decreases when more people are in the same position

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Coping : People have a strong capacity to overcome unfortunate events.

For exemple the case of paraplegics after an accident (controversies)

Experimental situations show that people have proved that they are unable to correctly recall pain suffered in the past

People tend to disregard the extent and speed with which they adjust to new situations

Self-binding…

Some glimpses of Economy of Happiness Salient facts on happiness

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Some glimpses of Economy of Happiness Salient facts on happiness

Inverse causation : Whether people are happy or unhappy

has a large effect on how they live : Happier persons are more successful in the labor

market…find a job more easily…and progress more quickly in their careers

Happier persons find more easily a partner…less exposed to loneliness

Happier persons are more cooperative…help others… It is extremely difficult in many cases to identify the

direction of causation.

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Subjective well-being depends on the prevaling economic conditions

Economy with unemployment, inflation, depressed lead to less happiness for people

This is one of the reason it is important to know the effects of economic conditions in order to develop relevant policies.

See also if some economic determinants are in conflict with each other…this is in particular the case with inflation and unemployment

Some glimpses of Economy of Happiness Salient facts on happiness

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Happiness also differ among countries because their political and social lives are governed by different institutions

Institutions fundamentally shape how a society is organized.

Institutions : constitutions, politics, market, government bureaucracy

Rights to individuals, basic human rights, vote, etc.

Some glimpses of Economy of Happiness Salient facts on happiness

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Example of the measurement of subjective happiness via a global self-reports.

1534 persons living in US in 1995.

They were asked : « All things considered, how satisfied are you with your life as a whole these days? »

Respondents had to indicate on a scale ranging form 1 (dissatisfied) to 10 (satisfied)

Some glimpses of Economy of Happiness Salient facts on happiness

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Another concept of happiness like experience sampling measures : ascertain moods, emotions, and others feeling at random moments in individuals‘ everydays’ lives

Some glimpses of Economy of Happiness Salient facts on happiness

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Measure of SWB - Happiness by survey

Happiness / Life Satisfaction • Happiness question: “If you were to consider

your life in general these days, how happy or unhappy

would you say you are, on the whole?

1. Not at all happy; 2. Not very happy; 3. Fairly happy; 4. Very

happy”. • Life Satisfaction question: “All things

considered, how satisfied are you with your life as a whole these

days? 1(dissatisfied) … 10 (very satisfied)”.

• Ladder question (Cantrill): “Imagine a 10-step ladder. The

lowest rung (0) represents the worst possible life for you, and

the highest step (10), the best possible life for you. On which

step are you today?"

Some glimpses of Economy of Happiness Salient facts on happiness

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The Most Widely Used Surveys International Surveys World Values Survey (97 countries, 1981-) European Social Survey (32 countries, 2002-) Eurobarometer Gallup World Poll National Household Surveys General Social Survey (USA, 1972-) German Socio-Economic Panel Study (GSOEP, 1984-), British Household Panel Survey (BHPS, 1996-), Russian Longitudinal Monitoring Survey (RLMS, 1994-) Australian Household Panel Survey (HILDA, 2001-) Happy Index http://survey.happyplanetindex.org/

Some glimpses of Economy of Happiness Salient facts on happiness

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Surveys : Self-reported happiness has turned out to be the best indicator of happiness.

The World Values Survey (WVS) grew out of the European Values Survey (EVS) group.

It surveys a population sample from over 40 countries every five years.

It includes the questions All things considered, how satisfied are you with your life as a whole nowadays?

(on a scale of 1 Dissatisfied to 10 Satisfied) and Taken all things together, would you say you are…’ (1 Very happy, 2 Quite happy, 3 Not very happy, 4 Not at all happy).

Some glimpses of Economy of Happiness Salient facts on happiness

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The European Values Survey (EVS) is a nationally representative cross-sectional survey of over 20 European countries undertaken every 9 years since 1981.

It includes the questions All things considered, how satisfied are you with your life as a whole nowadays?

(on a scale of 1‘Dissatisfied to 10 Satisfied) and Taken all things together, would you say you are… (1 Very happy, 2 Quite happy, 3 Not very happy, 4 Not at all happy).

Some glimpses of Economy of Happiness Salient facts on happiness

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The Eurobarometer is a survey of 300 000 people in 12 European countries.

Interviews are one-to-one in people’s homes and questions include

On the whole, are you very satisfied, fairly satisfied, not very satisfied or not at all satisfied with the life you lead?

Some glimpses of Economy of Happiness Salient facts on happiness

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The Gallup World Poll is a worldwide survey which has used Cantril’s ladder as a question on satisfaction with life: Please imagine a ladder, with steps numbered from 0 at the bottom to 10 at the top.

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?

Some glimpses of Economy of Happiness Salient facts on happiness

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The US General Social Survey (GSS) has surveyed a sample of 30 000 Americans since 1972, asking the question

Taken all together, how would you say things are these days? Would you say you are …? (Very happy=3, Pretty happy=2, Not too happy=1).

Some glimpses of Economy of Happiness Salient facts on happiness

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The International Social Survey Program (ISSP) is an annual program of cross-national collaboration on surveys covering topics important for social science research.

It covers 41 member countries and includes the question

If you were to consider your life in general these days, how happy or unhappy would you say you are, on the whole? (on the scale: 4 very happy, 3 fairly happy, 2 not very happy and 1 not at all happy).

Some glimpses of Economy of Happiness Salient facts on happiness

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The European Social Survey (ESS) is an academically-driven survey which collects data in over 20 European countries.

In the core questionnaire module it asks the question All things considered, how satisfied are you with your life as a whole nowadays? Please answer using this card, where 0 means extremely dissatisfied and 10 means extremely satisfied and Taking all things together, how happy would you say you are? (on a scale of 0–10).

In 2006/2007, it included a well-being module where it asked over 50 detailed questions about components of well-being, including How much of the time during the past week were you happy? (on a scale of 1–4).

Some glimpses of Economy of Happiness Salient facts on happiness

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The New Democracies Barometer uses a sample of 1000 people from Central and Eastern European countries to see how attitudes and behavior change as people gain more experience of democracies.

The German Socio-Economic Panel (GSOEP) is household panel survey, in which all members of the household are asked to participate in annual face-to-face interviews. There are over 24 000 respondents who have participated in at least one of the 24 waves.

Some glimpses of Economy of Happiness Salient facts on happiness

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The British Household Panel Survey (BHPS) (now called Understanding Society) began in 1991 and follows the same representative sample of individuals over time.

It is household-based, and every adult member of each sampled household is interviewed. Since its beginnings, it has included the question

How satisfied are you with your life overall? (response scale of 1 not satisfied at all to 7 completely satisfied) and

Would you say that you are more satisfied with life, less satisfied, or feel about the same you did a year ago?

Some glimpses of Economy of Happiness Salient facts on happiness

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Measures Life satisfaction is the most

commonly used subjective measure of well-being in the literature.

The usual wording for the life satisfaction question is as follows: All things considered, how satisfied are you with your life as a whole these days? Please give a score of 0 to 10 where 0 means extremely dissatisfied and 10 means extremely satisfied. However, it is sometimes worded in a slightly different way.

Some glimpses of Economy of Happiness Salient facts on happiness

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Overall happiness. The World Values Survey question wording for overall happiness is: Taking all things together, would you say you are: 1 Very happy, 2 Quite happy, 3 Not very happy, 4 Not at all happy?

Happiness in the past. The ESS, Gallup World Poll and the UK Office for National Statistics all ask questions about how happy respondents have felt over some period in the recent past, most commonly ‘yesterday’ or ‘in the past week’.

Some glimpses of Economy of Happiness Salient facts on happiness

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Cantril’s Ladder, also known as Cantril’s Self-Anchoring Scale, asks respondents to

Imagine a ladder, with steps numbered from 0 at the bottom to 10 at the top. 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. It then asks: On which step of the ladder would you say you personally feel you stand at this time?

Some glimpses of Economy of Happiness Salient facts on happiness

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The Warwick-Edinburgh Mental Well-being Scale (WEMWBS) is a 14-item scale specifically developed to capture psychological well-being.

It is designed to measure both hedonic and eudaimonic aspects of positive mental well-being and enquires about how people have been feeling and functioning over the past two weeks, obtaining a single total score.

There is also a shortened version, known as the S-WEMWBS, which consists of seven items and which has been shown to have good psychometric properties as a measure of a single well-being factor

Some glimpses of Economy of Happiness Salient facts on happiness

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The Centre for Epidemiological Studies Depression (CES-D) Scale measures current levels of depression, focusing mainly on the affective component, and includes positive as well as negative items.

The Satisfaction with Life scale is a short five-item instrument designed to measure cognitive judgments of satisfaction with one's life.

Some glimpses of Economy of Happiness Salient facts on happiness

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The General Health Questionnaire (GHQ) was developed as a screening instrument to detect psychiatric disorders in community settings and non-psychiatric clinical settings.

It asks several questions on psychological well-being and, from these, constructs a score. For the purpose of well-being research, the GHQ scores are inverted so that a high score represents high well-being (rather than as a measure of depression, which is the primary use for which the scale was designed).

Some glimpses of Economy of Happiness Salient facts on happiness

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Well-being research often uses concept of domain satisfaction as a means of assessing satisfaction with different areas of their lives, such as their work, family life, or social life.

Here a distinction is drawn between well-being from life as a whole, and the well-being associated with a single area of life.

Some glimpses of Economy of Happiness Salient facts on happiness

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The Day Reconstruction Method (DRM) instructs respondents to write a diary about ‘yesterday’. Within this they evaluate episodes of about an hour long, in terms of emotions felt (e.g. impatient for it to end, happy, frustrated/annoyed, depressed/blue, worried/anxious, enjoying myself, tired, stressed) on a scale of 0 ‘not at all’ to 6 ‘very much’.

The number of negative time episodes during an entire day is used to construct a ‘U-Index’ (Kahneman et al., 2004a).

Some glimpses of Economy of Happiness Salient facts on happiness

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Kroll, Christian , Pokutta, Sebastian “Just a perfect day? Developing a happiness optimised day schedule” Volume

34, February 2013, Pages 210–217, Journal of Economic Psychology.

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Measuring Well-Being Beyond GDP

Should income per capita really be the target of public policy

Is it a good proxy of wellbeing?Or an imperfect measure?

quality of life, Capabilties, freedom of choice, equal opportunities, etc.

This meets the discussion about the measures of well-being e.g. the Sen, Stiglitz Report for President Sarkoy (2009)

Answer this question : using Subjective Well-Being data

Some glimpses of Economy of HappinessGDP and happiness

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Some glimpses of Economy of HappinessGDP and happiness

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Some glimpses of Economy of HappinessGDP and happiness

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It is important to identify the limits of GDP as an indicator of economic performance and social progress

In the “information society”, access to data, including statistical data, is much easier.

More and more people look at statistics to be better informed or to make decisions (theory of decision, rate of unemployment each month,…)

To respond to the growing demand for information, the supply of statistics has also increased considerably, covering new domains and phenomena

Some glimpses of Economy of HappinessGDP and happiness

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What we measure affects what we do; and if our measurements or/and interpretation are flawed, decisions may be distorted.

However, there often seems to be a distance between standard measures of important socio economic variables like economic growth, inflation, unemployment, etc. and widespread perceptions.

The standard measures may suggest, for instance that there is less inflation (it is case with Euro) or more growth than individuals perceive to be the case,

and the gap is so large and so universal that it cannot be explained by reference to money illusion or to human psychology

Some glimpses of Economy of HappinessGDP and happiness

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In some countries, this gap has undermined confidence in official statistics (for example, in France and in the United Kingdom. only one third of citizens trust official figures),

http://www.cepremap.ens.fr/depot/opus/OPUS09.pdf

with a clear impact on the way in which public discourse about the conditions of the economy and necessary policies takes place.

Some glimpses of Economy of HappinessGDP and happiness

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There may be several explanations for the gap between the statistical measurement of socio-economic phenomena and citizen perception of the same phenomena:

The statistical concepts may be correct, but the measurement process may be imperfect or the opposite ?

In many cases, there are debates about what are the right concepts, and the appropriate use of different concepts.

When there are large changes in inequality (more generally a change in income distribution) gross domestic product (GDP) or any other aggregate computed per capita may not provide an accurate assessment of the situation in which most people find themselves

Some glimpses of Economy of HappinessGDP and happiness

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If inequality increases enough relative to the increase in average per capita GDP, most people can be worse off even though average income is increasing

The commonly used statistics may not be capturing some phenomena, which have an increasing impact on the well-being of citizens.

For example, traffic jams may increase GDP as a result of the increased use of gasoline, but obviously not the quality of life.

Some glimpses of Economy of HappinessGDP and happiness

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We are now living one of the worst financial, economic and social crises in post-war history.

One of the reasons why the crisis took many by surprise is that our measurement system failed us and/or market participants and government officials were not focusing on the right set of statistical indicators.

Neither the private nor the public accounting systems were able to deliver an early warning, and did not alert that the seemingly bright growth performance of the world economy between 2004 and 2007 may have been achieved at the expense of future growth.

It is also clear that some of the performance was a “mirage”, profits that were based on prices that had been inflated by a bubble.

Some glimpses of Economy of HappinessGDP and happiness

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Current well-being has to do with both economic resources, such as income,

and with non-economic aspects of peoples’ life (what they do and what they can do, how they feel, and the natural environment they live in).

Whether these levels of well-being can be sustained over time depends on whether stocks of capital that matter for our lives (natural, physical, human, social) are passed on to future generations.

Some glimpses of Economy of HappinessGDP and happiness

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Need to adapt the system of measurement of economic activity to better reflect the structural changes which have characterized the evolution of modern economies.

In effect, the growing share of services and the production of increasingly complex products make the measurement of output and economic performance more difficult than in the past.

Some glimpses of Economy of HappinessGDP and happiness

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There are now many products whose quality is complex, multi-dimensional and subject to rapid change.

This is obvious for goods, like cars, computers, washing machines, but is even true for services, such as medical services, educational services, information and communication technologies, research activities and financial services.

In some countries and some sectors, increasing “output” is more a matter of an increase in the quality of goods produced and consumed than in the quantity.

Capturing quality change is a challenge, yet this is vital to measuring real income and real consumption, some of the key determinants of people’s material well-being (hedonic price).

Under-estimating quality improvements is equivalent to over-estimating the rate of inflation, and therefore to under-estimating real income.

The opposite is true when quality improvements are overstated.

Some glimpses of Economy of HappinessGDP and happiness

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Governments play an important part in today’s economies.

They provide services of a “collective” nature, such as security, and of a more “individual” nature, such as medical services and education.

The mix between private and public provision of individual services varies significantly across countries and over time.

Some glimpses of Economy of HappinessGDP and happiness

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Beyond the contribution of collective services to citizens’ living standards, individual services, particularly education, medical services, public housing or public sports facilities, are almost certainly valued positively by citizens.

These services tend to be large in scale, and have increased considerably since World War II, but, in many cases, they remain badly measured.

Some glimpses of Economy of HappinessGDP and happiness

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Traditionally, measures have been based on the inputs used to produce these services (such as the number of doctors) rather than on the actual outputs produced (such as the number of particular medical treatments).

Making adjustments for quality changes is even more difficult.

Because outputs are taken to move in tandem with inputs productivity change in the provision of these services is ignored.

It follows that if there is positive (negative) productivity change in the public sector, our measures under (over)- estimate economic growth and real income.

For a satisfactory measure of economic performance and living standards it is thus important to come to grips with measuring government output.

Some glimpses of Economy of HappinessGDP and happiness

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Recommendation 1: When evaluating material well-being, look at income and consumption rather than production

Recommendation 2: Emphasize the household perspective

Recommendation 3: Consider income and consumption jointly with wealth

Recommendation 4: Give more prominence to the distribution of income, consumption and wealth

Recommendation 5: Broaden income measures to non-market activities

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Key dimension should be taken into account. At least in principle, these dimensions should be considered simultaneously:

i. Material living standards (income, consumption and wealth);

ii. Health;iii. Education;iv. Personal activities including workv. Political voice and governance;vi. Social connections and relationships;vii. Environment (present and future conditions);viii. Insecurity, of an economic as well as a physical

nature.

Some glimpses of Economy of HappinessGDP and happiness

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Recommendation 6: Quality of life depends on people’s objective conditions and capabilities.

Recommendation 7: Quality-of-life indicators in all the dimensions covered should assess inequalities in a comprehensive way

Recommendation 8: Surveys should be designed to assess the links between various quality of-life domains for each person, and this information should be used when designing policies in various fields

Recommendation 9: Statistical offices should provide the information needed to aggregate across quality-of-life dimensions, allowing the construction of different indexes

Recommendation 10: Measures of both objective and subjective well-being provide key information about people’s quality of life.

Some glimpses of Economy of HappinessGDP and happiness

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For most of economists, higher income leads to higher happiness

Expands the opportunity set…more goods and services…If few people are not interested…they have the freedom to dispose of any

unwanted surplus

Some glimpses of Economy of Happiness How does income affect happiness?

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For psychologists it is not so obvious…Case to a winner of the lottery…The level of happiness decrease day after day

in order to reach the initial level before the lottery…

Most of people quit their job and lose relationship, and a sense of accomplishment…

Some glimpses of Economy of Happiness How does income affect happiness?

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But some economists do not subscribe to the idea that higher income produces higher happiness

Galbraith (The Affluent Society)…pointet out the limited use of higher private income while the public sector is starving

Easterlin (1974), Scitovsky (1976)…

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Are people in rich countries happier than those in poor countries ?

Does an increase in income over time raise happiness ?

Are the people with high income in a country happier than those with low income ?

Some glimpses of Economy of Happiness How does income affect happiness?

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The Easterlin paradoxParadoxical relationship between income

growth andsubjective happiness:Within country

Across countries Over time at the individual level Over time in average across countries

BETSEY STEVENSON & JUSTIN WOLFERS “Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox”, Brookings Papers on Economic Activity, Spring 2008

Some glimpses of Economy of Happiness How does income affect happiness?

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Income and happiness between countries

Evidence that, on average, persons living in rich countries are happier than those living in poor countries…

Above 10 000 dollars, there is no sizable correlation betwen wealth and satisfaction with life.

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Moderate positive correlation with average real income per capita

In general, people in rich countries are happier than are those in poor countries.

This positive relationship is especially strong with countries below a GDP per capita of 10 000 dollars.

But for the rich countries, it does not seem that higher per capita income has any effect on happiness

The relationship between happiness and per capita income across countries is thus complex.

Some glimpses of Economy of Happiness How does income affect happiness?

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Nevertheless, the relationship between income and happiness is of limited value.

The positive correlation may be produced by other factors than income as such :

Countries with higher income tend to have more stable democraties than poor countries.

The more developed democratic institutions are, the more satisfied the citizens are

Some glimpses of Economy of Happiness How does income affect happiness?

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Others aspects positively correlated with higher income :

secure human rights, average health, equality of distribution of income (normally…)

See also the inverse causation…People who are happy are more inclined to work hard and to earn more.

More creative and enterprising leading to higher income.

Some glimpses of Economy of Happiness How does income affect happiness?

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But at then end, there is substantial evidence that it is indeed income that produces subjective well-being, at least for countries below certain threshold of wealth

All essential social indicators are more positive in nation of higher income

People enjoy more and better quality food, cleaner drinking water, better education, better health services, higher longevety, more parity between sexes, more respect for human rights

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Conclusion : across Nation, income and happiness go together

and higher income increases people’s subjective well being in poor countries

The notion that people in poor countries are happier because they live under « natural » an less stressful conditions can be considered as a myth.

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Income and happiness over timeSeveral scholars have identified a striking

and curious relationship :

Per capita income in US has risen sharply in recent decades,

but the proportion of persons considering themselves to be very happy has fallen over the same period

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This result is surprising because it is contradictory to the results presented just before that people in richer countries report to being happier

How to explain ? Positive correlation between happiness and

wealth is hidden due to changes in the composition of the population

The meaning of happiness may have changed over time

Some glimpses of Economy of Happiness How does income affect happiness?

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Perhaps 55 years ago, people were more inclined to state that they were ‘very happy’.

If it is the case, this figure is simply misleading there is no reason to ponder it.

A different reaction is to take the figure as an indication that « money does not buy happiness » or that there is more to subjective well being than just income

Some glimpses of Economy of Happiness How does income affect happiness?

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People are constantly drawing comparisons from the past and from their expectations of the future

We notice and react to deviations from aspirations levels that depend on our own, or other people’s experiences in the past

A rise in income initially provides a surge of satisfaction

But after some time we get accustomed to it and are not happier than before

Especially relevant if income serves to buy consumer goods

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Some glimpses of Economy of HappinessGDP and happiness

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Additional materials goods and services initially provide extra pleasure but it is always only transitory

This is a process that reduces the hedonic effects of a constant or repeated stimulus is called adaptation

It is this process of hedonic adaptation that makes people strive for ever higher aspirations

Four important consequences :

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The upward adjustement of expectations induces human beings to accomplish more and more

They are never satisfied / Case of nobel prices…

Wants are insatiableThe more one gets, more one wantsGreater opportunities (provided by higher

income) do not always raise happinessProvide more aspirations

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Most people think that they felt less happy in the past but expect to be more happy in the future

This asymmetry can be explained by changing aspirations

Relation between happiness and income according to the aspirations

Some glimpses of Economy of Happiness How does income affect happiness?

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Income between personsThe effects on happiness of income can also be

assessed by comparing people with a different income at a particular point in time who live in the same country.

At the first stage, people with higher income have more opportunities to achieve whatever they desire : buy more material goods and services

Higher income provides more utility Conversely, the poor are unhappy

Some glimpses of Economy of Happiness How does income affect happiness?

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In a given country, richer individuals are happier and more satisfied with their lives

Some glimpses of Economy of Happiness How does income affect happiness?

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OLS Estimate of Happiness in USA(General Social Survey, 2006)

Happiness = 0,2 log(income). Individuals aged 25-65, earning more than 5000$.

Some glimpses of Economy of Happiness How does income affect happiness?

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Happiness and log household income American General Social Survey (Stevenson and Wolfers,

2008)

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“In every representative national survey ever done, a significant bivariate relationship between happiness and income has been found” (Easterlin 2005) • Western developed countries: German Socio-Economic Panel (GSOEP), British Household Panel Survey (BHPS), Swiss household panel, Australian household survey (HILDA), General Social Survey (America), Netherlands, Denmark…. • Transition countries: Albania, Bulgaria, Latvia, Romania Russia, Estonia, Lithuania, Hungary, Belarus, Poland, Ukraine, Life in Transition Survey (LITS, 2006).... • Asia: China, India, Shanghai, South Korea. • Africa and Middle-East: Ethiopia, Nigeria, Peru, South-Africa (SALDRU), Tanzania, Turkey • Latin America: Argentina, Brazil, Chile Mexico, Venezuela. • International surveys: World Values Survey (1981- 2008, 5 waves, 105 countries), International Social Survey Program (101 countries), Gallup World Poll (2006, 105 countries), Latino Barometer (18 countries), European Social Survey (25 countries), European Values Survey, Euro-barometer.

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The research on happiness brings some differentiated results

There are many reasons why income does not buy happiness

« People are really seeking nonmaterials goods such as personal fulfillment or the meaning of life and are disappointed when materials things fail to provide them » (Dittmar, 1992)

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Happiness seems to be « priceless », that is cannot be achieved by material factors

But the empirical evidence shows that the general result is that happiness and income are indeed positively related…

But there is a noticeable effect of income on happiness (correlation is 0.2 in US)

Some glimpses of Economy of Happiness How does income affect happiness?

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Others studies taking into account a large number of factors, such age, gender, education, and health, also find a positive effect, but the effect is smaller.

Others economic factors as inflation and unemployment exert a greater influence

In fact, the relationship betwen income and happiness is curvilinear

Some glimpses of Economy of Happiness How does income affect happiness?

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Some glimpses of Economy of Happiness How does income affect happiness?

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At low levels of incomes, a rise in income strongly raises well-being,

but once an annual income of about 15 000 dollars has been reached

a rise in income has a smaller effect on happiness

Higher income is still experienced as raising well-being, but at a lower rate

The case of Switzerland :

Some glimpses of Economy of Happiness How does income affect happiness?

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This is of course different in poor countriesCalcutta : the correlation is 0.45

Relative income As pointed out, there are many reasons why higher

income does not simply translate into higher happiness

People compare themselves to other personsIt is not the absolute level of income that

matters most, but rathers one’s position relative to other persons

Some glimpses of Economy of Happiness How does income affect happiness?

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Easterlin (1974, 1995) used the concept of aspirations as a frame of reference to explain happiness

He acknowledges that people with higher income are, on average, happier,

but raising everybody’s income does not increase everybody’s happiness, because, in comparison to others, income has not improved

See also Thorstein Veblen (1889): He coined the term conspicuous consumption to describe the state of wanting to impress other people

Some glimpses of Economy of Happiness How does income affect happiness?

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The hypothesis of relative income has been formulated by Duesenberry (1949)

The wealthier people impose a negative external effect on the poorest people…but not vice-versa

Importance of the equality for the income’s distribution.

Some glimpses of Economy of Happiness How does income affect happiness?

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Role of relative social status by calling attention to ‘positional goods’, which, by definition, cannot be augmented because they solely rely on not being available to others

For example, only rich people will ever be able to afford servants

The production of positional goods in the form of luxuries, such as exceedingly expensise watches or yachts, is a waste of productive resources, as overall happiness is thereby decreased rather than increased.

Relational goods

Some glimpses of Economy of Happiness How does income affect happiness?

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Some glimpses of Economy of Happiness How does income affect happiness?

ConclusionParadoxical relationship between

income growth and subjective happiness: Within country, Across countries, Over time at the individual level, Over time in average across countries

Money does not buy but it contributeNot so easy, the debate is still important

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Salient facts : Happiness – Unemployment – InflationHow does unemployment affect happiness ?

Two approaches Keynes and the ‘new classical

macroeconomics’

Involuntary versus Voluntary

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Salient facts : Happiness – Unemployment – InflationHow does unemployment affect happiness ?

Personal unemployment

Substantial negative effect

on the happiness

Refer to the “pure” effect of being unemployed

The drop in happiness may,

be attributed to psychological and social factors

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The main empirical researches based on happiness differ with the view held by the new

classical macroeconomists

For those affected, being made redundant is considered to be a most unfortunate event,

creating major unhappiness

Salient facts : Happiness – Unemployment – InflationHow does unemployment affect Happiness ?

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Salient facts : Happiness – Unemployment – InflationHow does unemployment affect Happiness ?

Do not perform well

Therefore are laid off

Unhappy people

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Salient facts : Happiness – Unemployment – InflationHow does unemployment affect happiness ?

General unemployment

Fear being hit

by unemployment

Feel bad about the unfortunate

fate of those

unemployed

Contributions and taxes

that is likely to happen in the future

Fear that crime and social unease

will increase

Threat of violent protests

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Salient facts : Happiness – Unemployment – InflationHow does unemployment affect happiness ?

Unemployment causes major unhappiness

Contrast with the view that unemployment is voluntary

It lowers the happiness of

those people

lose their job

and, also causes distress

to employed people.

The notion that work produces disutility is rejected

Unemployment needs to be seen in a wider context

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Wage earners, as well as owners of nominal assets such as cash or bonds, risk being the losers.

Economics starts with this distinction between anticipated and unanticipated inflation…when

analyzing how inflation affects individuals

Salient facts : Happiness – Unemployment – InflationHow does inflation affect happiness?

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Salient facts : Happiness – Unemployment – InflationHow does inflation affect happiness?

Costof inflation

Psychic effect of inflation

No relationship between average

happiness and inflation rate

HAPPINESS

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How much, on average, must a country reduce its inflation in order

to tolerate a rise of one point in unemployment ?

Salient facts : Happiness – Unemployment – Inflation

Trade-offs between Inflation and Unemployment

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The so-called ‘misery index’ :

If unemployment rises by 5 points, the inflation rate must decrease by 8.5

points to keep the population equally satisfied.

Salient facts : Happiness – Unemployment – InflationTrade-offs between Inflation and Unemployment

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Our research - database

Macroeconomic variables as the 'GDP per capita' and

the rate of growth rate are from 'The Groningen Growth and

Development Center database'The series

of inflation and unemployment rates are extracted from OECD

World Database of Happiness

DATABASE

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Our research - database

‘How satisfied are you with the life you lead? Very satisfied, fairly satisfied, not very satisfied or not at all satisfied’.

The variable LS measures the average level of life satisfaction in a given country at time t.

Example: i =France, t =2010

Question not at all

satisfied’

not very

satisfied

fairly

satisfied

very

satisfied

Codage 1 2 3 4

For N=1020 4% 13% 63% 20%

variable itLS = 2.99 0.041 + 0.132+0.633+0.204=2.99

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Our research - model

ittiititit vuLS 210

where itv is a random term assumed independently and identically distributed, with

mean zero and variance 2v . The specification rests upon the hypothesis according to

which the impact of the macroeconomic variables on the level of life satisfaction is the same for all countries (that is, the economies’ behaviour is homogeneous). In practice, the heterogeneity of behavior may be taken into account by the specific effects i and t

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Our research - Results

Inflation rate has a minor impact on life satisfaction

Unemployment rate effect proves to be very significant

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Our research - Results

The influence of inflation and unemployment rates is not the same according to countries’.

We observe that only the French case show that both the two variables act significantly

on the life satisfaction.

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Our research - Results

Table 2: Predicting individual estimations: LS = f(Inflation, Unemployment) Dependent variable: life satisfaction UE12, 1985-2009 (T=25, N=12)

Random Model Fixed Model

Country Inflation Unemployment Inflation Unemployment

Belgium 0.0046 -0.0314 0.0103 -0.0393 ***

Denmark -0.0487 -0.0063 -0.0652 *** -0.0039

France -0.0486 -0.0396 -0.0593 *** -0.0457 ***

Ireland -0.0105 -0.0150 -0.0105 -0.0151 ***

Italy -0.0124 0.0049 -0.0169 0.0130

Luxembourg 0.0081 0.0091 0.0139 0.0198 **

Netherlands -0.0016 -0.0171 0.0027 -0.0167 ***

United Kingdom -0.0072 -0.0117 -0.0074 -0.0112

Greece -0.0058 -0.0184 -0.0043 -0.0088

Portugal 0.0063 -0.0328 0.0065 -0.0344 ***

Spain 0.0112 -0.0188 0.0128 * -0.0192 ***

Germany 0.0113 -0.0275 0.0146 -0.0293 ***

Notes: (***), (**) and (*) significance at 1%, 5% and 10% levels respectively.

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Our research - Some perspectives

Life Satisfaction and the Philips Curve

Estimation results: Phillips curve and life satisfaction specification EU12, 1985-2009 (T=25, N=12), Estimation method : random eeffect

(1) (2) (3)

Phillips curve Life satisfaction

Constant 2.6990 *** 3.4442 ***

Initial inflation rate 0i 0.3556 *** -0.0377 ***

Unemployment rate itu -0.2301 *** -0.0143 ***

Speed of nominal convergence 4.1%

Implied inflation rate effect 1 -0.1060

Implied unemployment rate effect 2 -0.0389

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Our research - Some perspectives

The results show that the effect of inflation included the Philips Curve is now significant

The effect of rising unemployment (-3.89%) is offset by the interactive effect of lower inflation (-

0.2301) and its effect on life satisfaction (-0.1060).

This implies that the increase in the unemployment rate does a drop of 1.43% for life satisfaction.

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Our research - Some perspectives

OKUN law – the rate of growth

Difference between Germany and France

The role of the Central Bank

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Happy planet index

https://www.youtube.com/watch?v=M1o3FS0awtk

International Comparisons Example of rankings

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Subregions Population Life Sat Life Exp EF HPI HPI rank

1a Central America, Mexico & Carribean 177 357 723 7,4 73,7 2,6 = 59,0 11b South America 372 117 447 7,2 72,4 2,3 = 58,9 22a Australia & NZ 24 533 736 7,9 80,7 7,8 = 36,6 142b North America 328 819 000 7,9 78,1 9,2 = 31,6 162c Western Europe 250 653 583 7,3 79,4 4,8 = 45,8 72d Nordic Europe 24 606 168 8,0 79,5 6,1 = 43,5 112e Southern Europe 124 819 950 7,1 80,0 5,2 = 42,6 133a North Africa 145 875 661 6,2 71,1 1,6 = 57,1 43b Middle East / South West Asia 260 275 106 5,8 69,4 2,5 = 44,7 94a Southern & Central Africa 210 384 432 4,1 47,0 1,1 = 28,1 184b East Africa 243 139 152 3,9 51,9 1,4 = 26,9 194c West Africa 264 546 262 4,4 50,4 1,4 = 29,8 175a South Asia 1 499 002 055 5,5 63,7 0,9 = 53,4 66a China 1 304 500 000 6,7 72,5 2,1 = 57,1 56b Wealthy East Asia 187 146 143 6,7 81,1 4,6 = 43,6 106c South East Asia 496 504 376 5,9 70,4 1,2 = 58,5 37a Central Asia & Caucuses 71 445 052 5,6 66,9 2,0 = 45,7 87b Central & Eastern Europe 127 038 782 6,1 73,9 3,5 = 42,8 127c Russia, Ukraine & Belarus 200 030 741 5,7 65,8 3,5 = 35,4 15

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Countries Life Sat

Costa Rica 8,5

Ireland 8,1

Norway 8,1

Denmark 8,1

Finland 8,0

Canada 8,0

Australia 7,9

Sweden 7,9

United States of America 7,9

Iceland 7,8

New Zealand 7,8

Austria 7,8

Panama 7,8

Mexico 7,7

Netherlands 7,7

Saudi Arabia 7,7

Switzerland 7,7

Luxembourg 7,7

Belgium 7,6

Spain 7,6

Dominican Republic 7,6

Brazil 7,6

Guatemala 7,4

United Kingdom 7,4

Colombia 7,3

United Arab Emirates 7,2

Germany 7,2

Cyprus 7,2

Hong Kong 7,2

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Argentina 7,1

Singapore 7,1

Nicaragua 7,1

Malta 7,1

Israel 7,1

France 7,1

Honduras 7,0

Slovenia 7,0

Italy 6,9

Venezuela 6,9

Paraguay 6,9

Czech Republic 6,9

Greece 6,8

Japan 6,8

Uruguay 6,8

Cuba 6,7

Jamaica 6,7

China 6,7

Trinidad and Tobago 6,7

El Salvador 6,7

Egypt 6,7

Kuwait 6,7

Belize 6,6

Malaysia 6,6

Guyana 6,5

Bolivia 6,5

Vietnam 6,5

Poland 6,5

Ecuador 6,4

Croatia 6,4

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Korea 6,3

Chile 6,3

Thailand 6,3

Laos 6,2

Bhutan 6,1

Kazakhstan 6,1

Slovakia 6,1

Uzbekistan 6,0

Serbia 6,0

Jordan 6,0

Romania 5,9

Syria 5,9

Bosnia and Herzegovina 5,9

Peru 5,9

Tunisia 5,9

Russia 5,9

Burma 5,9

Portugal 5,9

Belarus 5,8

Lithuania 5,8

Hungary 5,7

Indonesia 5,7

Mongolia 5,7

Djibouti 5,7

Moldova 5,7

Estonia 5,6

Morocco 5,6

Iran 5,6

Pakistan 5,6

Algeria 5,6

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Turkey 5,5

India 5,5

Macedonia 5,5

Philippines 5,5

Albania 5,5

Bulgaria 5,5

Latvia 5,4

Sri Lanka 5,4

Chad 5,4

Iraq 5,4

Nepal 5,3

Ukraine 5,3

Azerbaijan 5,3

Bangladesh 5,3

Yemen 5,2

Haiti 5,2

Tajikistan 5,1

Armenia 5,0

Kyrgyzstan 5,0

Palestine 5,0

Mauritania 5,0

South Africa 5,0

Cambodia 4,9

Nigeria 4,8

Ghana 4,7

Lebanon 4,7

Botswana 4,7

Namibia 4,5

Sudan 4,5

Senegal 4,5

Uganda 4,5

Malawi 4,4

Zambia 4,3

Angola 4,3

Georgia 4,3

Rwanda 4,2

Central African Republic 4,0

Guinea 4,0

Ethiopia 4,0

Cameroon 3,9

Congo, Dem. Rep. of the 3,9

Mozambique 3,8

Mali 3,8

Niger 3,8

Madagascar 3,7

Kenya 3,7

Congo 3,6

Burkina Faso 3,6

Sierra Leone 3,6

Benin 3,0

Burundi 2,9

Zimbabwe 2,8

Togo 2,6

Tanzania 2,4

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International Comparisons Example of rankings

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International Comparisons The better life index

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International Comparisons How to interpret these international

comparisons of happiness?

Comparability across NationsCultural bias in reports of happiness. American Citizens have a tendency to claim

that they are (very) happy because happiness is positevely valued in that society

The French have the opposite bias « Happy people are idiots » (C. De Gaulle)

The Japanese are said to be reluctant to profess to being very happy because of the social custom of modesty.

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Of course because of economic and political factors but also because of culture, values, civilization…maybe….

R. Inglehart WVS.

International Comparisons How to interpret these international

comparisons of happiness?

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Sacred and Secular: Religion and Politics Worldwide Inglehart's 2004 book with Pippa Norris

Religiosity persists most strongly among vulnerable populations, especially those in poorer nations and in failed states, facing personal survival-threatening risks.

Exposure to physical, societal and personal risks drives religiosity.

Conversely, a systematic erosion of traditional religious practices, values and beliefs may have occurred among the more prosperous strata in rich nations.

International Comparisons How to interpret these international

comparisons of happiness?

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But at the same time, a growing proportion of the population—in both rich and poor countries—spends time thinking about the meaning and purpose of life.

It is argued that in developed countries, the established churches are losing their ability to tell people how to live their lives, but spiritual concerns, broadly defined, may be becoming increasingly important.

International Comparisons How to interpret these international

comparisons of happiness?

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Secularization is the transformation of a society from close identification with religious values and institutions toward nonreligious values and secular institutions.

The secularization thesis refers to the belief that as societies progress, particularly through modernization and rationalization, religion loses its authority in all aspects of social life and governance.

International Comparisons How to interpret these international

comparisons of happiness?

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Modernization, Cultural Change and Democracy, New York and Cambridge: Cambridge University Press, 2005)

People's basic values and beliefs are changing, in ways that affect their political, sexual, economic, and religious behavior.

Modernization is a process of human development, in which economic development triggers cultural changes that make individual autonomy, gender equality, and freedom increasingly likely.

International Comparisons How to interpret these international

comparisons of happiness?

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Culture Shift in Advanced Industrial Society (Princeton: Princeton University Press, 1990).

Economic, technological, and sociopolitical changes have been transforming the cultures of advanced industrial societies.

Value shift is part of a much broader process of cultural change that is gradually transforming political, economic, and social life in these societies.

International Comparisons How to interpret these international

comparisons of happiness?

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Modernization and PostmodernizationEconomic development, cultural change, and political change

go together in coherent and, to some extent, predictable patterns.

Industrialization leads to related changes such as mass mobilization and diminishing differences in gender roles.

Changes in worldviews seem to reflect changes in the economic and political environment

but take place with a generational time lag. Following industrialization, advanced industrial society leads to

a basic shift in values, de-emphasizing instrumental rationality.Postmodern values then bring new societal changes, including

democratic political institutions and the decline of state socialist regimes.

International Comparisons How to interpret these international

comparisons of happiness?

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Authority and Value Systems. Source: R. Inglehart, Modernization and Postmodernization (Princeton,

1997).

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Self-expression values are part of a core value dimension in the modernization process.

Self-expression is a cluster of values that include social toleration, life satisfaction, public expression and an aspiration to liberty.

On the Inglehart–Welzel Cultural Map self-expression values are contrasted with survival values, illustrating the changes in values across countries and generations.

International Comparisons How to interpret these international

comparisons of happiness?

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How Culture Varies ?Analysis of WVS data asserts that there are two major

dimensions of cross cultural variation in the world: 1) Traditional values versus Secular-rational values and 2) Survival values versus Self-expression values.

Traditional values emphasize the importance of religion, parent-child ties, deference to authority and traditional family values. People who embrace these values also reject divorce, abortion, euthanasia and suicide. These societies have high levels of national pride and a nationalistic outlook.

International Comparisons How to interpret these international

comparisons of happiness?

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Secular-rational values have the opposite preferences to the traditional values. These societies place less emphasis on religion, traditional family values and authority. Divorce, abortion, euthanasia and suicide are seen as relatively acceptable.

Industrialization tends to bring a shift from traditional values to secular-rational ones.

With the rise of the knowledge society, cultural change moves in a new direction.

The transition from industrial society to knowledge society is linked to a shift from Survival values to Self-expression values.

International Comparisons How to interpret these international

comparisons of happiness?

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Survival values place emphasis on economic and physical security. It is linked with a relatively ethnocentric outlook and low levels of trust and tolerance.

Self-expression values give high priority to environmental protection, growing tolerance of foreigners, gays and lesbians and gender equality, and rising demands for participation in decision-making in economic and political life.

International Comparisons How to interpret these international

comparisons of happiness?

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Examples

Societies that have high scores in Traditional and Survival values: Zimbabwe, Morocco, Jordan, Bangladesh.

Societies with high scores in Traditional and Self-expression values: the U.S., most of Latin America, Ireland.

Societies with high scores in Secular-rational and Survival values: Russia, Bulgaria, Ukraine, Estonia.

Societies with high scores in Secular-rational and Self-expression values: Sweden, Norway, Japan, the Netherlands

International Comparisons How to interpret these international

comparisons of happiness?

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SURVIVAL VALUES emphasize the following: Attitude: Correlation: gives priority to economic and physical security over self expression and

quality of life [Materialist/Postmaterialist Values] .87 Men make better political leaders than women .86 is not highly satisfied with life .84 A woman has to have children to be fulfilled .83 rejects foreigners, homosexuals and people with AIDS as neighbors .81 has not and would not sign a petition .80 is not very happy .79 favors more emphasis on the development of technology .78 Homosexuality is never justifiable .78 has not recycled something to protect the environment .76 has not attended a meeting or signed a petition to protect the

environment .75 A good income and safe job are more important than a feeling of

accomplishment and working with people you like .74

International Comparisons How to interpret these international

comparisons of happiness?

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does not rate own health as very good .73 A child needs a home with both a father and a mother in order to grow up

happily .73 When jobs are scarce, a man has more right to a job than a women .69 A university education is more important for a boy than for a girl .67 Government should ensure that everyone is provided for .69 Hard work is one of the most important things to teach a child .65 Imagination is not of the most important things to teach a child .62 Tolerance is not of the most important things to teach a child .62 Leisure is not very important in life .61 Scientific discoveries will help humanity .60 Friends are not very important in life .56 You have to be very careful about trusting people .56 has not and would not join a boycott .56 is relatively favorable to state ownership of business and industry .54 SELF-EXPRESSION VALUES take opposite position on all of above

International Comparisons How to interpret these international

comparisons of happiness?

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The desire for free choice and autonomy is a universal human aspiration, but it is not top priority when people grow up feeling that survival is uncertain.

As long as physical survival remains uncertain, the desire for physical and economic security tends to take higher priority than democracy.

When basic physiological and safety needs are fulfilled there is a growing emphasis on self-expression values.

International Comparisons How to interpret these international

comparisons of happiness?

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International Comparisons How to interpret these international

comparisons of happiness?

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Clash of Civilization ???

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Creativity, Growth, Nudge and Happiness: the Case of Shanghai

Pan Jin, Director International affairs Shanghai UNESCO Creative City Promotion Office

Deputy Secretary General, Shanghai Creative Industry Center & Francis Munier, University

of Strasbourg, France

Creativity and Happiness

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INTRODUCTION

Florida R, Mellander C, & H. Qian (2012)

“(…) that neither talent nor technology is associated with the economic performance of Chinese regions” (…) “obstacles in moving (…) to a more knowledge-based economy”.

Brockmann et al. (2009)

Subjective well-being index in China decreased despite improvement in material living standards and increasing of GDP growth.

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INTRODUCTION

Discontinue the historical model based

on low labor costs

Uphold the quantitative growth and improve the quality of life of citizens

“Created in China” rather than “made in

China”?

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INTRODUCTION

Need to focus on creativity and well-being is now the

new challenge

World Bank (2012), China 2030: Building a Modern, Harmonious, and Creative

High-Income Society, report

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INTRODUCTION

Cultural assets for creativity and happiness

Matching outputs of economics of creativity

and economics of happiness in the case of

Chinese culture

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AGENDA

Creativity and Creative CityCreative Class – ValuesCreativity and the ‘milieu’Hard versus soft infrastructuresDilemmas of creativity Guanxi Nudge Happiness

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Creative city

City appears to be the ideal "space" for identifying and

promoting creativity, and also for

conducting ad hoc policies

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Creative Class - Values

Florida (2002) : creative class is the focal node of the creative dynamics of cities.

Congruence between talent, technology and tolerance.

Creative people are well educated and graduates.

Tolerant behavior - the so-called postmodern values (Ingelhart, 1997).

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Creative Class, Values and some Indexes

Tolerant image of the city would be a key element for attracting creative class.

Florida (2002) : "The Gay Index" and "The bohemian Index" as proxies indicators for attractiveness and creativity.

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Creativity and the importance of the ‘milieu’

Interesting : importance of the ‘milieu’ as catalyst for creativity.

Technology and knowledge are necessary but not sufficient.

The ‘milieu’ plays a key role in creativity.

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Creativity and the importance of the ‘milieu’

Culture and Civilization

Creative Clusters (Flew, 2005) Cultural-Creative Clustering Strategy (Mommaas, 2009)

Creative Industries (Tschang, 2009)

No replication of these strategies (Oakley, 2009; Pratt, 2009)

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Hard versus soft infrastructure

Landry (2000, p. 133) : creative environment is a combination of hard infrastructure and soft infrastructure

Hard : network of institutions and districts which define the idiosyncrasy of a city, and also investments, core strategies.

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Soft Infrastructure

Soft Infrastructure :

“system of associative structures and social networks, connections and human interactions, that underpins and encourage the flow of ideas between individuals and institutions”

Potential vector of original creative processSoft infrastructures as cultural assets

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Creative city

Cohendet et al. (2010) Three layers could shape the anatomy of a creative

city: underground which concern the level of individuals,

middle ground as the level of communities and the bridge between the under and upper ground

upper ground as the level of formal firms and institutions

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The dynamic of creativity in a city is “the” expression of the solution of dilemma

Munier F. (2013), “Creativity and uncertainty in the act of work : the contribution of the viability theory”, The economics of creativity : ideas,

firms and markets.- London Routledge

The nature of the dynamic of creativity in a city is “the” expression of the solution of the dilemma

between the informal and free creativity of individuals (underground / soft infrastructures)

and the more formal and coerced behaviors of institutions (for instance municipalities, agencies, and government)

in the implementation of policies such as creative cluster strategies (upper ground / hard infrastructures).

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Expression of the dilemma

The dilemma is between control (hard infrastructure) versus commitment (soft infrastructure)

and stability (hard infrastructure) versus change (soft infrastructure).

Hard infrastructure is a source of coherence and order, but also a source of inertia

Soft infrastructure is a source of creativity but caution to codes and references

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Creative city as a form of duality where this dilemma is resolved

A creative city as a form of duality where this dilemma is resolved

The role of a creative city is not only to allocate resources according to the hard infrastructures logic,

but also to initiate creativity without too much constraints and pressures at the underground

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“Creative Milieu” - Guanxi

We analyze the Soft Infrastructures as keys elements of “Creative Milieu” in the case of Chinese Culture.

For that, we introduce the concept of Guanxi to show the cultural advantage of Chinese society in managing the dilemma of creative city

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Definition Guanxi

Technically, Guanxi stands for any type of relationship

Guanxi is than a social capital, an important resource that a person can use in order to find some best practices.

Guanxi is also a set of assets, a hyphen between individuals and formal institutions (Xin & Pearce, 1996).

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Definition Guanxi

Guanxi can facilitate the transfer of tacit knowledge

Guanxi can build up the trust that is necessary for someone who wants to share his experience (Levin & Cross, 2004).

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Guanxi could be the natural middle ground of creative city in China

Related link between the two types of infrastructure could be a very specific social capital:

Guanxi as a community of knowledge (Munier & Huan, 2010).

Guanxi could be the natural middle ground of creative city in China (Soil of the Chinese culture (Fei, 1992))

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Confucianism, copyright and creativity

“It has been argued that China’s Confucian traditions focused on the transmission or

passing down of creative works for others to build on,

rather than learning or creation as in

individualized activity”

Montgomery L. & B.F. Fitzgerald (2006)

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‘creative da-tong’ Liao (2006, p. 402)

“The phrase ‘creative da-tong’ incorporates western reformist agendas with the current official Chinese agenda. The Chinese term da-tong (…) can serve as a keyword that provides a further development goal, incorporating the current Chinese policy agenda of xiaokang [‘middle-class, well-off’] society, and also embodying the alternative notion of creative industries that builds on the concepts of ‘free culture’ (…) and creative labour. ‘Creative da-tong’ describes a political and pragmatic coalition of creative labour (not yet intellectual propertized) with cultural industries (on the way to being disorganized and networked”.

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Nudging creativity in the city

Thaler H.R. & C.R. Sunstein (2008, pp. 5-6) assert that nudge leads “any aspect of the choice architecture that alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives (…) to influence choices in a way that will make the chooser better of as judged by themselves”.

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Nudging creativity

Nudging creativity seems to be the viable policy both to keep and promote the dynamics of creativity at the underground together with a capture at the upper ground

Viable in the sense that nudge avoids the opposition between them.

The government has to influence and to promote Creative clusters without stifling the very creativity of creators.

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Nudging creativity in the city

Nudge policy seems to be than the ‘smart’ policy because of freedom for creativity at the bottom-up process

This is again a form of “Dual-Track” approach (Gang, 1994) that permits both market incentive and state intervention.

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Nudging creativity

Nudge policy appears to be also very useful considering the very specific role of Guanxi in Chinese society.

Include the aspect of social pressures in the choice architecture.

Individuals consider how others perceive them; look at some people within the community when they have to cope with some difficulties; search trust and use the inter-relational influences.

Very close to Guanxi

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Happiness

Growth and money explain only partially the happiness of individuals.

This ‘happiness paradox’ is also observed in China (Easterlin et al., 2012).

The pursuit of prosperity must now be relying on the interrelated issue of happiness and creativity

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Happiness and Creativity

Binder (2012) highlights the importance and the nature of the link between innovativeness and happiness

“If economic growth and the transformation of an economy lead to unhappiness, policy makers will have

to balance their demand for economic growth with measures to mitigate the negative impact on subjective

well-being or otherwise face the danger of loosing citizens’ support for their policies.

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Flow theory Csikszentmihalyi

Flow is defined as an autotelic experience

Most of the time, flow people feel this experience during the process of creation

Autotelic people often brimming with activity, never counting the hours, are always ready to

innovate or be involved in a new project.

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Flow theory Csikszentmihalyi

Moreover, the flow theory is very interesting for our purpose because it provides replies to

questions as:

‘If We Are So Rich, Why Aren’t We Happy?’

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Flow theory Csikszentmihalyi

“The prerequisite for happiness is the ability to get fully involved in life (…) Creating

conditions that make flow experiences possible is one aspect of that “pursuit of happiness” for

which the social and political community should be responsible”

Csikszentmihalyi (1999a).

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Flow theory Csikszentmihalyi

Flow people are also looking for recognition.

Creativity “is as much a cultural and social as it is a psychological event”

Guanxi

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Flow theory Csikszentmihalyi

The domain (a system of symbols and practices regarding a body of knowledge) and the field (a

collection of individuals and institutions that evaluate products in a certain domain during a particular historical period) are associated with

socio-cultural factors.

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Creative Class and Happiness

According to Florida et al. (2013), the emergence of a creative class is a well vector for both social and human capital.

Education and creativity will lead to more interconnection, more creative class and also to more trust.

Positively correlated with happiness (Powdthavee & Stutzer, 2014).

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Creative goods and Happiness

“Good life” is a close concept of eudemonism:

the process is more important comparing to the objective itself

education and wisdom provide well-being and avoid consequently the frustration of hedonic treadmill.

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Creative goods and Happiness

Creativity provides the freedom of choice that is a “route to self-realization and happiness”.

This freedom of choice is related to the idea of nudge as libertarian paternalism policy (Binder, 2012)

Capabilties

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Conclusion

Idea that the economic model based on growth with low cost of labour is no longer viable and that it should go to the “made in china” to “created in china”

Chinese culture seems to have a natural advantage based on the practice of Guanxi.

This is similar to a community of knowledge and appears as the middle ground level of the anatomy of a creative city.

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Conclusion

Chinese culture allows also an adapted Nudge policy application.

 Connection between creativity and happiness

The outlook is to overcome the limitations of this article which is essentially programmatic.

Try to provide empirical evidence to the conceptual foundations

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The creative class, post-industrialism and the

happiness of nations (2011), Charlotta Mellander, Richard Florida and Jason Rentfrow,

Cambridge Journal Regions Eco Soc

Creativity and Happiness

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Creativity and Happiness

Happiness stems from another structural factor associated with the level of economic development.

Higher levels of subjective well-being will be exhibited in societies that have made the transition to post-industrial economies—

those with higher levels of education and where a greater share is engaged in knowledgebased and creative work.

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Sacks et al. (2010) suggest that there is a close relationship between material living standards and life satisfaction

and that countries that experience a rapid economic growth also get an equivalent increase in life satisfaction levels.

Creativity and Happiness

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Graham (2008) finds the relationship between the Income and Happiness is relative.

Noting the paradox of the ‘happy peasant and the miserable millionaire’

Graham contends that although people can adapt to be happy at low levels of income, they are far less happy when there is uncertainty over their future wealth

Creativity and Happiness

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Thus, the income effect on happiness is not only based on

individual perceptions but also on

the social and economic context in which individuals are embedded : rate of unemployment, institutions, stability, etc.

Creativity and Happiness

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There is a substantial literature documenting the transformation from industrial to post-industrial economies and societies.

Nearly a half-century ago, Machlup (1962) identified the rise of the knowledge economy.

Creativity and Happiness

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Drucker (1967) coined the term ‘knowledge worker’ to refer to the emerging social group of workers who understand how to apply knowledge to productive use.

This construct was later expanded to one of a ‘knowledge society’ (Drucker, 1993) where the traditional means of production are replaced by human capital and new institutional structures.

Creativity and Happiness

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Bell (1973) predicted the rise of a ‘post-industrial society’ led by a class of highly educated scientists and technocrats.

Reich (1991) described the rise of what he termed ‘symbolic analysts’— a sector of workers comprising engineers, scientists, executives and professors, whose work involves processing and manipulating information and symbols.

Creativity and Happiness

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Empirical support for these transformations revealed that as of 1996, the ‘scientific, professional and knowledge economy’ (defined as industries where at least 5 per cent of the workforce has graduate degrees) accounted for 36% of US employment (Brint, 2001).

Creativity and Happiness

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Florida (2002) documents the rise of the creative class as a hallmark of post-industrial societies

Empirical studies find the creative class has been growing substantially for decades in the advanced economies, while the proportion of blue-collar workers has been declining (Boschma and Fritsch, 2009; Clifton, 2008; Florida and Tinagli, 2004).

Creativity and Happiness

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The creative class includes occupations in computer science and mathematics; architecture; engineering; life, physical and social science; education, training and library science;

As well as arts and design work, work in and entertainment, sports and media;

and also professional and knowledge work occupations including management occupations, business and financial operations, legal positions, health care practitioners, technical occupations and high-end sales and sales management.

Creativity and Happiness

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Post-industrialism has been found to be associated with a significant shift in values.

This shift revolves around a movement away from traditional religious values, conformity, norms about seniority, conventional views about gender and sexuality and redistributive interest-group politics

to new values that are more secular in nature, encourage self-expression and individualism, openness and tolerance and favour public goods over redistribution (for example, the rise of environmental awareness).

Creativity and Happiness

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Whether and to what degree the creative class and post-industrial structures affect life satisfaction.

Life satisfaction to be comparatively high in nations that are inclusive and accepting of alternative lifestyles and cultures.

This latter hypothesis is particularly important, as previous work suggests that freedom, equality and

social relationships have greater influence on well-being in wealthy societies compared to poor ones (Diener and Seligman, 2004).

Creativity and Happiness

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Hypothesis : National levels of happiness and subjective well-being are higher in nations with greater levels of the creative class and post-industrial structures and post-materialist values.

Two distinctive mechanisms driving this difference.

Creativity and Happiness

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One mechanism is employment and the nature of the labour market.

Results from a number of studies indicate that well-being is positively related to job satisfaction (Diener and Seligman, 2004),

and job satisfaction is linked to job complexity (Judge et al., 2001), the range of skills used on the job (Glisson and Durick, 1988), person–job fit (Roberts et al., 2007) and perceived control over one’s work (Grebner et al., 2005).

Creativity and Happiness

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It is conceivable that wellbeing is higher in post-industrial societies because more individuals are engaged in jobs that offer more satisfying work experiences compared to industrialized societies.

Therefore, larger proportions of people in post-industrial nations should derive satisfaction from their jobs and, as a result, experience greater life satisfaction compared to individuals in industrial nations.

Creativity and Happiness

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Also, individuals in creative–knowledge–professional jobs experience lower rates of unemployment than those in bluecollar industrial work or lower skill service jobs.

Individuals in creative–knowledge–professional work also tend to have higher level and more flexible skills that enable them to switch jobs more readily than others when laid off,

or to find new more fulfilling employment if their job becomes less interesting.

Creativity and Happiness

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A second mechanism that could contribute to social structural differences in well-being is education.

Post-industrial nations are characterized by more highly educated individuals. While previous studies have not found a close relationship between education and well-being (Diener, 1984; Diener et al., 1999),

Several mechanisms through which education affects happiness.

Creativity and Happiness

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Nations with more educated individuals may be comparatively high in life satisfaction because education affords many opportunities and experiences that are linked to happiness.

Education is positively related to social mobility,income and occupational status, and negatively related to depression (Becker,

1993; Lipset and Bendix, 1959; Mincer, 1974; Mirowsky and Ross, 2003)

Creativity and Happiness

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Education is also associated with more stable marriages and family ties, factors that are closely correlated with subjective well-being (Glenn and Supancic, 1984; Lyngstad, 2004).

More educated individuals postpone marriage and have more opportunities over time to select more suitable partners (Dixon, 1978; Goldstein and Kenney, 2001).

Creativity and Happiness

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Individuals with higher levels of education tend to engage in work that employs greater levels of cognitive and social skill,

and studies of job satisfaction note a close connection between challenging work and happiness (Judge et al., 2001).

Education is also closely associated with unemployment.

Creativity and Happiness

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Methodology and results Service class: proportion of a nation’s

residents who work in routine service occupations such as preparation and food service-related occupations, building and grounds, cleaning and maintenance, personal care and service, low-end sales of more standardized products, and services, office and administrative support, community and social services and protective services.

Creativity and Happiness

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Manufacturing class:

This group consists of occupations related to construction and extraction, installation, maintenance and repair, production, transportation and material moving occupations

Creativity and Happiness

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Post-industrial structure

Human capital: expressed as the share of the age group enrolled in tertiary education which

include training at a wide range of post-secondary education institutions, including technical and vocational schools, community colleges and universities, which normally require as a minimum condition of admission the successful completion of education at the secondary level.

Creativity and Happiness

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Results :Strong and significant relationship between

GDP per capita and life satisfaction. This suggests that people living in wealthy nations, where the standard of living is high, are more satisfied with their lives compared to people in less wealthy nations.

GDP per capita and life satisfaction are lower for high-income countries (0.52) compared to low-income countries (0.62).

Creativity and Happiness

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Relationship between educational attainment and life satisfaction varies as a function of national wealth.

It is conceivable that highly educated people who live in low-income countries are less satisfied with life because they may have fewer opportunities to apply and use the skills they have developed.

Creativity and Happiness

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A similar pattern of relationships emerges for life satisfaction and share of the labour force in creative jobs.

Across all countries, the correlation between the life satisfaction and the creative class is quite strong,

but when analyse low- and high-income nations separately, only high-income countries display a positive relationship between life satisfaction and creative jobs

Creativity and Happiness

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This suggests that people who live in low-income countries with high shares of creative jobs experience lower levels of life satisfaction compared to people in high-income nations.

Creativity and Happiness

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For all countries, there is a strong and significant correlation between life satisfaction and service class (0.45),

but different patterns of results emerge when analyse low- and high-income countries separately.

Among low income countries, the relationship remains positive (0.48) and among high-income countries the link is negative !

Creativity and Happiness

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In low-income countries, a higher share of service jobs is a sign they are undergoing an economic transition, moving from manufacturing-based production to an economic system that is more dependent on services.

Creativity and Happiness

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Across all countries, the correlation between share of the workforce in manufacturing class jobs and life satisfaction was negative and significant (–0.32),

but when low- and high-income nations are analysed separately, the relationship is small and non-significant among low income countries (0.18) and large and negative among high-income countries (–0.53).

Creativity and Happiness

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Taken together, these results suggest that national differences in life satisfaction should be understood not only in terms of income but also in terms of post-industrial structures and values.

Indeed, education and creative class work structures both contribute to national levels of life satisfaction in high-income nations.

Our conclusion regarding human capital stands in some contrast to the findings of previous research, which found no close relationship between education and well-being

Creativity and Happiness

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Key Findings – The Economy

Across countries, higher income nations generally experience higher average levels of subjective well-being at any given point in time (cross-sectional data).

The correlation across countries between high national income and well-being is substantially reduced once quality of government, democracy and social capital is controlled for.

Within countries, individual income and life satisfaction are positively related at any point in time (cross-sectional data).

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Key Findings – The Economy

Across developed nations there is not always a relationship between changes in national income and changes in levels of well-being over time (longitudinal data) – suggesting that once a certain level of national income per capita has been reached (which varies from country to country) general increases in national income per capita do not necessarily translate into substantial increases in subjective well-being.

Relative income has been found to have a substantial and important effect on well-being and explains much of the income-well-being relationship.

The satisfaction with life measure and Cantril’s Ladder seem to be more strongly related to income than other measures of well-being, for example overall happiness or ‘emotional well-being’.

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Key Findings – The Economy

Higher income-growth countries seem to experience higher levels of subjective well-being although this relationship is complex and depends on the national income per capita.

At the individual level, lower household income appears to lead to lower children’s well-being.

Although not wholly conclusive, evidence suggests that a higher level of income inequality in a country seems to reduce the average subjective well-being of its citizens.

Higher public spending and benefit entitlements appear to be associated with higher well-being at the national level.

In Europe, there is a positive relationship between child well-being and both national spending on family services and benefits, and GDP.

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Key Findings – The Economy

Unemployment is strongly negatively correlated with various measures of subjective well-being. This relationship exists over a range of national and international datasets.

Unemployment is negatively associated with well-being across a range of nations but the size of its effect seems to vary across countries and across studies.

Although some people with lower well-being may be more likely to become unemployed, these ‘selection effects’ do not explain the size of the relationship between unemployment and well-being.

Although people may adapt somewhat to being unemployed, the effect does not seem to completely disappear.

Page 277: Economy of Happiness Course PPTe

Key Findings – The Economy

The loss of well-being far exceeds that expected from the reduction in income associated with unemployment.

National and regional unemployment rates have been found to reduce subjective well-being.

However the effects of individual unemployment on well-being seem to be partially ‘neutralised’ in high-unemployment regions.

Page 278: Economy of Happiness Course PPTe

Key Findings – The Economy

There appears to be a positive effect of being self-employed on well-being, but the evidence is mixed.

When workers function well and feel secure in their job they are more satisfied with their work.

There seems to be a U-shaped relationship between hours worked and subjective well-being.

In general, credit card and ‘unmanageable’ debt is associated with lower well-being. This relationship, however, does not hold for mortgages or investment debts.

Commuting is associated with negative affect and a reduction in life satisfaction.

Page 279: Economy of Happiness Course PPTe

Key Findings – Community

Strong social networks and time spent socializing are positively associated with subjective well-being.

There appears to be a positive relationship between volunteering and subjective well-being, and altruistic behaviour promotes subjective well-being.

There is a positive relationship between subjective well-being and membership of (non-church) organisations.

Regular engagement in religious activities is positively related to well-being.

Social trust (trust in other people) is found to be associated with higher life satisfaction and happiness, and a lower probability of suicide.

Page 280: Economy of Happiness Course PPTe

Key Findings – Community

Trust in key public institutions – for example, government, the police and the legal system – is associated with higher life satisfaction.

There is a positive link between democracy and life satisfaction.

Being single is worse for well-being than being in a stable relationship.

Family conflict is associated with lower children’s well-being.

Page 281: Economy of Happiness Course PPTe

Key Findings – Health

Poor self-reported health is associated with lower subjective well-being and better self-reported health is associated with higher subjective well-being.

Poor objective health and disability are associated with lower subjective well-being, although this relationship is weaker than that of self-reported health and subjective well-being.

Although people may adapt somewhat to chronic illness, complete adaptation does not seem to occur.

Higher subjective well-being is associated with improved health and longevity.

Psychological health has a very strong relationship with subjective well-being, and seems to be more highly correlated with well-being than physical health.

Page 282: Economy of Happiness Course PPTe

Key Findings – Health

Physical activity has a beneficial effect on well-being (as well as on health).

Sleep problems are associated with lower life satisfaction, lower happiness and a reduction in other measures of subjective well-being.

In addition, optimum sleep levels are associated with positive benefits to most of the measures of subjective well-being.

Page 283: Economy of Happiness Course PPTe

Key Findings – Education and Care

Many (but not all) studies have found that more education is often associated with higher subjective well-being, when controlling for other variables (particularly income and health).

However, some studies reveal no significant relationship or a negative relationship between education level and well-being, and in several cases it appears the relationship is non-linear.

There is a positive association between positive features of children’s learning environments and their well-being.

More time spent in informal care-giving is associated with lower subjective well-being.

Page 284: Economy of Happiness Course PPTe

Key Findings – The Built Environment

Living in a deprived area, even after controlling for income, is detrimental to life satisfaction and affects other dimensions of well-being.

A positive perception of the surrounding landscape is linked to other dimensions of well-being.

Natural landscapes appear to be more restorative than urban ones.

There is evidence that aspects of neighborhoods such as ‘walkability’ and street layout are positively related to well-being; it seems likely that this relationship operates indirectly via benefits to social capital for residents.

High housing quality is positively associated with well-being; low housing quality is associated with lower well-being and

psychological stress.

Page 285: Economy of Happiness Course PPTe

Key Findings – The Built Environment

Multi-dwelling housing is associated with adverse psychological health.

Overcrowding is associated with lower well-being. Living on a higher floor level is associated with lower well-being. Home ownership is associated with higher well-being; renting is

associated with lower well-being. Subjective well-being appears to be lower in more densely populated

areas and higher in rural areas. The concentration of air pollutants in the region where an individual

lives has a negative impact on subjective well-being. Noise pollution is associated with lower subjective well-being. Crime is negatively associated with well-being, both for victims and

for residents in areas of high crime rates. Climate has an effect on subjective well-being and extreme weather

is detrimental to well-being.

Page 286: Economy of Happiness Course PPTe

Key Findings – Personal characteristics

There is a U-shaped relationship between age and subjective well-being: as young people grow older their subjective well-being reduces, until a well-being minimum is reached between the ages of 35 and 50, and after that age subjective well-being increases again.

There are international differences in subjective well-being across genders.

Race is an important predictor of current happiness and life satisfaction in the United States, where the White population has higher levels of average well-being than the Black population. However, the lack evidence from other countries means this cannot be generalized to Europe and other regions.

Studies suggest that up to half of the variation in subjective well-being between individuals can be explained by genetics.

Personality traits are strongly related to subjective well-being There is a negative relationship between materialist values and

subjective well-being.