What are We Learning from the Life Satisfaction Literature?

Government of the Italian Republic (Italy), Ministry of Economy and Finance, Department of the Treasury Working Paper No. 2

48 Pages Posted: 28 Feb 2011  

Leonardo Becchetti

University of Rome, Tor Vergata - Faculty of Economics

Alessandra Pelloni

University of Rome II, Department of Economics

Date Written: January 4, 2011

Abstract

The recent availability of cross-sectional and longitudinal survey data on life satisfaction in a large number of countries gives us the opportunity to verify empirically (and not just to assume) what matters for individuals and what economists and policymakers should take into account when trying to promote personal and societal well-being. The wide array of econometric findings available in this booming literature display evidence, generally robust to different cultural backgrounds, on the effects of some important happiness drivers (income, unemployment, marital status) which can be considered “quasi stylized facts” of happiness. If economic policies, for many obvious reasons, cannot maximize self declared life satisfaction as such, we are nonetheless learning a lot from these contributions. In particular, results on the relevance and the risk of crowding out of relational goods, on the revisited inflation/unemployment trade off and, more in general, on the measurement of the shadow value of non market goods obtained with life satisfaction estimates, are conveying relevant information about individual preferences and what is behind utility functions. Such findings suggest us to move beyond anthropological reductionism toward behavioral complexity and to refocus target indicators of economic policies in order to minimize the distance between economic development and human well-being.

Keywords: life satisfaction, shadow value of non market goods, unemployment/inflation

JEL Classification: J60

Suggested Citation

Becchetti, Leonardo and Pelloni, Alessandra, What are We Learning from the Life Satisfaction Literature? (January 4, 2011). Government of the Italian Republic (Italy), Ministry of Economy and Finance, Department of the Treasury Working Paper No. 2. Available at SSRN: https://ssrn.com/abstract=1769602

Leonardo Becchetti (Contact Author)

University of Rome, Tor Vergata - Faculty of Economics ( email )

Via Columbia, 2
I-00133 Rome
Italy

Alessandra Pelloni

University of Rome II, Department of Economics ( email )

Via Columbia n.2
Rome, rome 00100
Italy
390672595908 (Phone)

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