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

Heinz Welsch and Jan Kühling ()

No 50 / 2015, ZenTra Working Papers in Transnational Studies from ZenTra - Center for Transnational Studies

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 (search for similar items in EconPapers)
JEL-codes: E32 E61 I31 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2015-03
New Economics Papers: this item is included in nep-eur, nep-hap and nep-mac
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http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2572979 Revised Version, 2015 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:zen:wpaper:50

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