The Macroeconomics of Happiness

Rafael Di Tella and MacCulloch, R.J.: Oswald, A.J.
Authors registered in the RePEc Author Service: Robert MacCulloch and Andrew J. Oswald

Working Papers from Centre for Economic Performance & Institute of Economics

Abstract: A large literature in macroeconomics assumes a social objective function, W(pi,U), where inflation, pi, and unemployment, U, are bads. This paper provides some of the first formal evidence for such an approach. It issues data on the reported well-being levels of approximately one quarter of a million sampled Europeans and Americans from the 1970's to the 1990's. After controlling for personal characteristics, year dummies and countries fixed effects, we find that the data trace out a W(pi,U) function. It is approximately a linearly additive "misery index". The paper calculates the implied dollar value of a low inflation rate. It also examines the struture of happiness equations across countries and time.

Keywords: UNEMPLOYMENT; INFLATION (search for similar items in EconPapers)
JEL-codes: E24 E31 (search for similar items in EconPapers)
Date: 1997
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Related works:
Working Paper: The Macroeconomics of Happiness (2001)
Journal Article: The Macroeconomics of Happiness (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:fth:cepies:19

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