How Has the Crisis of 2008-2009 Affected Subjective Well-Being? Evidence from 25 OECD Countries

38 Pages Posted: 3 Mar 2015

See all articles by Heinz Welsch

Heinz Welsch

University of Oldenburg; ZenTra - Center for Transnational Studies

Jan Kühling

University of Oldenburg; ZenTra - Center for Transnational Studies

Date Written: March 3, 2015

Abstract

This paper uses life satisfaction data of almost 140,000 individuals in 25 OECD countries to study how changes in the rates of GDP growth, unemployment and inflation during the macroeconomic crisis of 2008-2009 have affected subjective well-being. The relative contributions of the three macroeconomic variables to individuals’ life satisfaction are used to assess how each country performed on balance during the crisis. This approach follows a recent trend of using subjective well-being data for monitoring economic performance and for policy appraisal. We find that in the countries most strongly affected by the crisis the effects on an average citizen’s well-being may be of a similar magnitude as the effects of the most serious personal life events. The main driver of these effects is the drop in GDP, whose impact is aggravated by the increase of unemployment. Though the inflation rate went down in several of the countries, the effect was too weak to significantly reduce the negative effect of the changes in GDP and unemployment. The results show that GDP fluctuations are important drivers of subjective well-being.

Keywords: macroeconomic crisis; subjective well-being; life satisfaction

JEL Classification: E32; I31; E61

Suggested Citation

Welsch, Heinz and Kühling, Jan, How Has the Crisis of 2008-2009 Affected Subjective Well-Being? Evidence from 25 OECD Countries (March 3, 2015). ZenTra Working Paper in Transnational Studies No. 50 / 2015. Available at SSRN: https://ssrn.com/abstract=2572979 or http://dx.doi.org/10.2139/ssrn.2572979

Heinz Welsch (Contact Author)

University of Oldenburg ( email )

Ammerländer Heerstraße 114-118
Oldenburg, DE D-26111
Germany

ZenTra - Center for Transnational Studies ( email )

Ammerländer Heerstraße 138
Oldenburg, 26131
Germany

Jan Kühling

University of Oldenburg

Ammerländer Heerstraße 114-118
Oldenburg, DE D-26111
Germany

ZenTra - Center for Transnational Studies ( email )

Ammerländer Heerstraße 138
Oldenburg, 26131
Germany

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