Is Business Cycle Volatility Costly? Evidence from Surveys of Subjective Well‐Being

Justin Wolfers

International Finance, 2003, vol. 6, issue 1, 1-26

Abstract: This paper analyses the effects of business cycle volatility on measures of subjective well‐being, including self‐reported happiness and life satisfaction. I find robust evidence that high inflation and, to a greater extent, unemployment lower perceived well‐being. Greater macroeconomic volatility also undermines well‐being. These effects are moderate but important: eliminating unemployment volatility would raise well‐being by an amount roughly equal to that from lowering the average level of unemployment by a quarter of a percentage point. The effects of inflation volatility on well‐being are less easy to detect and are likely smaller.

Date: 2003
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https://doi.org/10.1111/1468-2362.00112

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Working Paper: Is Business Cycle Volatility Costly? Evidence from Surveys of Subjective Well-Being (2003)
Working Paper: Is Business Cycle Volatility Costly? Evidence from Surveys of Subjective Wellbeing (2003)
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