Is Business Cycle Volatility Costly? Evidence from Surveys of Subjective Wellbeing

Justin Wolfers

No 9619, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper analyzes 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.

JEL-codes: D60 D63 (search for similar items in EconPapers)
Date: 2003-04
New Economics Papers: this item is included in nep-cbe, nep-dge, nep-mac and nep-rmg
Note: EFG LS
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Citations: View citations in EconPapers (138)

Published as Wolfers, Justin. "Is Business Cycle Volatility Costly? Evidence From Surveys Of Subjective Well-Being," International Finance, 2003, v6(1,Apr), 1-26.

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Journal Article: 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 Well-Being (2003)
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