Partisan Social Happiness

Harvard Business School Working Paper Series 2000

41 Pages Posted: 1 May 2001

See all articles by Robert MacCulloch

Robert MacCulloch

Imperial College London - Tanaka Business School

Rafael Di Tella

Harvard Business School - Business, Government and the International Economy Unit; National Bureau of Economic Research (NBER)

Date Written: April 7, 2000

Abstract

We use data on the subjective well-being of more than a quarter of a million people living in the OECD over the period 1975-92 to study the behavior of partisan social happiness functions. Controlling for personal characteristics of the respondents, year and country fixed effects and country specific time trends, we find that the data describe social happiness functions for left-wing and right-wing individuals where inflation and unemployment enter negatively. We use these functions to test the root assumption of partisan business cycle models where left-wing individuals care more about unemployment relative to inflation than right-wingers. Bootstrap confidence intervals suggest that up to 90 per cent of the time the evidence is consistent with this assumption. Interestingly, we find that it is misleading to assume that the poor (rich) behave similarly to the left (right). For example, the poor are hurt more by inflation than the rich, while the left are hurt less. Finally, we find that individuals declare themselves to be happier when the party they support is in power, even after controlling for economic variables. Our findings are hard to explain using median voter models but are to be expected in a partisan world.

Keywords: Median Voter, Partisan Business Cycles, Subjective Well-Being

JEL Classification: E6

Suggested Citation

MacCulloch, Robert and Di Tella, Rafael, Partisan Social Happiness (April 7, 2000). Harvard Business School Working Paper Series 2000. Available at SSRN: https://ssrn.com/abstract=267362 or http://dx.doi.org/10.2139/ssrn.267362

Robert MacCulloch (Contact Author)

Imperial College London - Tanaka Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Rafael Di Tella

Harvard Business School - Business, Government and the International Economy Unit ( email )

Cambridge, MA
United States
617-495-5048 (Phone)
617-496-5985 (Fax)

HOME PAGE: http://www.people.hbs.edu/rditella/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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