Natural capital, subjective well-being, and the new welfare economics of sustainability: Some evidence from cross-country regressions

The measurement of natural capital and its management during the economic development process are important aspects of the capital approach to sustainable development. However, the assessment of social welfare in terms of genuine savings (or changes in total wealth per capita) is arguably too limited. This paper tries to make a case for the incorporation of subjective well-being measures in debates about sustainable development by exploring the macro-level relationship between subjective well-being and natural capital in a cross-country setting. It is tested whether natural capital per capita is correlated with subjective well-being in a sample of fifty-eight developed and developing countries, using natural capital data from the World Bank's Millennium Capital Assessment. Bivariate regressions indicate that it is. When multiple regression models are estimated that include (a) major country-level determinants of subjective well-being (GNI per capita, social capital, income distribution, unemployment, inflation), and (b) regional dummy variables for ex-Soviet Union and Latin American countries, the positive correlation remains. The role of data outliers is carefully explored, and the sensitivity of the results to the use of alternative subjective well-being measures (i.e. life satisfaction, happiness, and a combined life satisfaction and happiness index) is investigated. This does not change the nature of the results. The findings arguably strengthen the case for a ‘new welfare economics of sustainability’ that takes subjective well-being measures into account.     

The Lasting Well-Being Effects of Early Adulthood Macroeconomic Crises

This paper studies the effects of macroeconomic crises experienced in early adulthood on subjective well-being (SWB) later in life. Using repeated cross-sectional survey data of over 100,000 individuals from 38 countries around the world combined with historical data on macroeconomic circumstances, I find that having experienced a macroeconomic crisis at ages 18–25 is detrimental to SWB. This result is in line with earlier literature that focuses on other individual-level outcomes. However, the analysis presented in this paper reveals that outcomes related to individual’s earnings, employment status, family life, and religion cannot fully explain the lasting effect of macroeconomic crises on well-being. Results on heterogeneous responses show that the negative effect is largest for females and for individuals with low educational attainment.     

Income maximization and the selection and sorting of international migrants

Two prominent features of international labor movements are that the more educated are more likely to emigrate (positive selection) and more educated migrants are more likely to settle in destination countries with high rewards to skill (positive sorting). Using data on emigrant stocks by schooling level and source country in OECD destinations, we find that a simple model of income maximization can account for both phenomena. Results on selection show that migrants for a source-destination pair are more educated relative to non-migrants the larger is the absolute skill-related difference in earnings between the destination country and the source. Results on sorting indicate that the relative stock of more educated migrants in a destination is increasing in the absolute earnings difference between high and low-skilled workers. We use our framework to compare alternative specifications of international migration, estimate the magnitude of migration costs by source-destination pair, and assess the contribution of wage differences to how migrants sort themselves across destination countries.     

Who benefits from big government? A life satisfaction approach

Which impact does government size have on life satisfaction, and how do effects of bigger government differ between income groups in society? Previous studies typically employed country averages and thus neglected possibly heterogeneous happiness effects between income groups. This paper addresses empirically the effects of government spending on subjective well-being of individuals belonging to different income groups. Our analysis is based on individual data from 25 European countries participating in the European Social Survey. In contrast to most previous studies we take account of the endogeneity between relative income position and reported life satisfaction by an instrumental variable approach. Our results suggest, first, that most government spending categories, including social protection, are on average negatively related to individual well-being. Secondly, estimated marginal effects of health, education and social protection spending at different income levels show that spending increases always have a stronger negative effect on high income groups’ well-being than on low income groups’ life satisfaction. For all government spending categories, marginal happiness effects of higher public spending are clearly negative for income groups at the top.     

The subjective well-being of workfare participants: insights from a day reconstruction survey

In this article, we shed more light on the subjective well-being of workfare participants and compare it to the well-being of unemployed and employed workers. We use data from a self-conducted survey among participants in workfare schemes in Germany. We examine two subdimensions of subjective well-being – life satisfaction and emotional well-being – separately to obtain a more comprehensive view of the subjective well-being of workfare participants. Our results show that the life satisfaction of people in this group is between that of employed and unemployed people. In contrast, their emotional well-being is the highest of these three groups.     

Satisfaction and comparison income in transition and developed economies

The main purpose of this paper is to evaluate the impact of different types of income comparison on subjective well-being in transition countries and developed European countries. The paper relies on the Life in Transition Survey (European Bank for Reconstruction and Development 2011), which was conducted in late 2010 jointly by the European Bank for Reconstruction and Development and the World Bank. The emphasis of the paper is on income comparisons, specifically; local comparisons and self-ranking. The main findings reveal that comparisons have a significant impact on life satisfaction in transition countries, whereas the relationship between comparison and life satisfaction is ambiguous in developed European countries. In transition countries, the impact of comparisons is asymmetric: in most cases, under-performing one’s benchmark has a greater effect than out-performing it. In transition countries, both downward and upward evaluations have an impact on life satisfaction, while it is worthy of note that all upward evaluations have no effect on life satisfaction in developed European countries.     

Extreme bounds of subjective well-being: economic development and micro determinants of life satisfaction

This article presents a global sensitivity analysis of micro determinants of life satisfaction (LS), a subjective well-being (SWB) measure of quality of life, as it relates to economic development. We test 53 micro variables using extreme bound analysis on a pooled cross-section data from the World Value Survey representing 98 countries between 1989 and 2014. Several standard variables frequently included in SWB regressions are controlled for. The test variables are broadly categorized as demographic, personal–economic, individual traits and values, social attitudes and collectivism, social relationships and perceptions of control. We find subjective health status, household income rank, family savings, religiosity, most perceptions of control and several social attitudes and collectivism measures to be universal LS determinants. Generally, the determinants of LS vary by a country’s level of economic development. In particular, we provide suggestive evidence that as countries develop, certain needs are satisfied and stop being important contributors to LS while others take their place.     

Estimating worldwide life satisfaction

Whilst studies of life satisfaction are becoming more common-place, their global coverage is far from complete. This paper develops a new database of life satisfaction scores for 178 countries, bringing together subjective well-being data from four surveys and using stepwise regression to estimate scores for nations where no subjective data are available. In doing so, we explore various factors that predict between-nation variation in subjective life satisfaction, building on Vemuri and Costanza's (Vemuri, A.W., & Costanza, R., 2006. The role of human, social, built, and natural capital in explaining life satisfaction at the country level: toward a National Well-Being Index (NWI). Ecological Economics, 58:119-133.) four capitals model. The main regression model explains 76% of variation in existing subjective scores; importantly, this includes poorer nations that had proven problematic in Vemuri and Costanza's (Vemuri, A.W., & Costanza, R., 2006. The role of human, social, built, and natural capital in explaining life satisfaction at the country level: toward a National Well-Being Index (NWI). Ecological Economics, 58:119-133.) study. Natural, human and socio-political capitals are all found to be strong predictors of life satisfaction. Built capital, operationalised as GDP, did not enter our regression model, being overshadowed by the human capital and socio-political capital factors that it inter-correlates with. The final database presents a stop-gap resource that, until robust surveys are carried out worldwide, allows comparisons of subjective life satisfaction between nations to be made with reasonable confidence.     

Mapping patterns of well-being and quality of life in extended Europe

In this paper, we have applied a powerful clustering procedure (the two-step cluster analysis or BIRCH algorithm) to a set of non-monetary indicators of well-being and quality of life taken from the first four waves of the European Social Survey. By employing this technique, we have identified nine clusters of people characterized by different forms of well-being and quality of life, while preserving as much as possible the multidimensional information contained in the preselected indicators. We then analyzed the distribution of the clusters among the various European countries, finding significant differences among the groups of Nordic countries, Continental European countries, Mediterranean European countries and Eastern European countries in the chances of belonging to the nine forms of well-being and quality of life previously identified. On average, citizens of the Nordic countries, but also those of Switzerland and Luxembourg, have a higher chance of belonging to cumulative clusters of well-being than countries in Continental Europe and Eastern Europe. In very concise terms, the former appear to be somewhat protected from the risk of incurring the more severe forms of material deprivation, distrust of others and of institutions, poor health and relational isolation. In contrast, Eastern Europeans are characterized by particularly pronounced levels of deprivation across multiple dimensions.     

Foreign Direct Investment and External Financing Conditions: Evidence from Normal and Crisis Times

In this paper, we investigate the effects that external financing conditions in source and destination countries have on foreign direct investment (FDI) in normal and crisis times, using a difference‐in‐differences approach. We find that the financial development of the source and destination countries has a strong positive impact on the relative volume of FDI in financially vulnerable sectors in normal times. However, during the 2008–2010 global financial crisis, the relative volume of FDI in financially vulnerable sectors fell relatively more in financially developed source and destination countries, most notably if these countries experienced a credit crisis.     

Adaptive Preferences and Capabilities: Some Preliminary Conceptual Explorations

The Capability Approach (CA) as developed by Amartya Sen and Martha Nussbaum, has in part been a response to the problem of adaptive preferences. Their argument says that people might adapt to certain unfavorable circumstances and any self-evaluation in terms of satisfaction or happiness will in this case necessarily be distorted. To evaluate people's well-being in terms of functionings and capabilities guarantees a more objective picture of people's life. Next to this strong criticism on subjective measurements of well-being, we observe an increasing interest in Subjective Well-Being (SWB) or Happiness studies that are included in the broader field of Hedonic Psychology. In this paper, we thus revise the original critique of adaptive preferences and compare it with a more detailed analysis of adaptation as it is presented in hedonic psychology. It becomes clear that adaptation can be a positive as well as a negative phenomenon and that the adaptive preference critique had a particular narrow view on adaptation. However, this does not mean SWB-research is not any longer susceptible to this critique. An alternative way to assess people's subjective well-being, but which could be considered to be more in line with the CA, is proposed by Daniel Kahneman's Objective Happiness. These are all relatively new considerations, especially in economics. Therefore much more research needs to be done on the positive and negative aspects of adaptation to understand its consequences on well-being – especially when evaluated within the capability-space.     

The associations between early life circumstances and later life health and employment in Europe

We use data from the Survey of Health, Aging, and Retirement in Europe to estimate for thirteen European countries the associations of early life circumstances—measured by childhood health and socioeconomic status (SES)—with educational attainment, and later life health and employment (at ages 50–64). In all countries and for men and women, favorable early life circumstances, and in particular a higher childhood SES, are associated with a higher level of education. In most countries and in particular for women, favorable early life circumstances are associated with better later life health, also when education is controlled for. The significant associations of favorable early life circumstances with a higher incidence of later life employment are mostly transmitted through education and later life health.     

Life satisfaction and air quality in Europe

Concerns for environmental quality and its impact on people's welfare are fundamental arguments for the adoption of environmental legislation in most countries. In this paper, we analyze the relationship between air quality and subjective well-being in Europe. We use a unique dataset that merges three waves of the European Social Survey with a new dataset on environmental quality including SO₂ concentrations and climate in Europe at the regional level. We find a robust negative impact of SO₂ concentrations on self-reported life satisfaction.     

A human well-being approach for assessing the value of natural land areas

To decide on the policy measures to be implemented, policymakers need comprehensive information on the costs and benefits of land conversion for society. Accordingly, the EU Biodiversity Strategy requires the member countries to assess their ecosystems and the economic value of their ecosystem services by 2020. This paper takes up and extends the subjective well-being approach to valuing changes in natural land cover, which provides information on willingness-to-pay for landscape amenities such as scenic views or recreational opportunities. Results at the NUTS 2 level for European countries indicate (a) that marginal willingness-to-pay estimates tend to be higher for natural areas that are scarcer, and (b) that a nonlinear relationship between land cover and well-being is preferred to a linear relationship indicating decreasing benefits from individual landscape amenities.     

城乡居民主观幸福差异及其影响因素研究——以成都市为例

在对成都市433名城区、郊区和农村居民的结构式访问基础上,以"整体生活满意度"和"具体生活满意度"作为主观幸福的核心维度,运用方差分析、多元回归分析方法,对城乡居民的主观幸福差异及其影响因素进行了分析。城乡居民主观幸福在一些维度上存在明显差异,在另一些维度上没有显著差异;城乡居民存在着增进和损害其各自主观幸福的条件和因素,这些条件和因素包括工作状况、家庭收入、居住条件、家庭生活、人际关系、闲暇活动、健康状况、生活城市等。     

创业动机与主观幸福感：社会规范的调节作用

基于自我决定理论与目标设置理论,对2013年GEM数据库69个国家的16 976个创业者进行调查,探究创业动机（生存型动机与机会型动机）对创业者主观幸福感的影响机制,分析创业效能感的中介作用和社会规范的调节作用。结果显示：创业动机正向影响创业效能感,进而提升主观幸福感;社会规范负向调节创业动机对主观幸福感的影响。结论可为改善创业者幸福感,打造“双创”战略升级版提供理论参考和实践指导。     

Pharmaceutical regulation under market integration through parallel trade

In this paper, I study the effect of parallel trade (cross-border resale of goods without the authorization of the manufacturer) on pharmaceutical regulation. Governments may restrict prices directly (price caps) or limit third-party payer reimbursement for the drug (reimbursement limits). I find that parallel trade may relax regulation in the source country of parallel imports under both instruments and intensify regulation in the destination country under a reimbursement limit. I also find that parallel trade may change regulatory preferences: under no parallel trade, both the source and destination country set price caps, and under parallel trade, the source country sets a price cap but the destination country sets a reimbursement limit, thereby enforcing a higher price cap in the South. This implies that drug prices are higher under parallel trade in both source and destination countries.     

Formal institutions and subjective well-being: Revisiting the cross-country evidence

A long tradition in economics explores the association between the quality of formal institutions and economic performance. The literature on the relationship between such institutions and happiness is, however, rather limited, and inconclusive. In this paper, we revisit the findings from recent cross-country studies on the institution–happiness association. Our findings suggest that their conclusions are qualitatively rather insensitive to the specific measure of ‘happiness’ used, while the associations between formal institutions and subjective well-being differ among poor and rich countries. Separating different types of institutional quality, we find that in low-income countries the effects of economic–judicial institutions on happiness dominate those of political institutions, while analyses restricted to middle- and high-income countries show strong support for an additional beneficial effect of political institutions. Our results bear important implications that we discuss in the concluding section of the paper.     

Happiness, geography and the environment

In recent years, economists have been using socio-economic and socio-demographic characteristics to explain self-reported individual happiness or satisfaction with life. Using Geographical Information Systems (GIS), we employ data disaggregated at the individual and local level to show that while these variables are important, consideration of amenities such as climate, environmental and urban conditions is critical when analyzing subjective well-being. Location-specific factors are shown to have a direct impact on life satisfaction. Most importantly, however, the explanatory power of our happiness function substantially increases when the spatial variables are included, highlighting the importance of the role of the spatial dimension in determining well-being.     

The Consumption of a Finite Planet: Well-Being, Convergence, Divergence and the Nascent Green Economy

A variety of global metrics indicate the Earth has overshot its capacity to supply source and sink resources without substantial negative feedback. Here the relationship between consumption indicators (oil, freshwater, vehicle and meat consumption, GDP, $\mathrm{CO }_{2}$ CO 2 emissions) and well-being is analysed latitudinally across 189 countries and longitudinally over 60 years within three affluent countries. All latitudinal analyses show the characteristic “consumption cliff and affluent uplands” shape: e.g. at low per capita GDP, life satisfaction increases sharply up the cliff with rising GDP; after a threshold, well-being is independent of GDP across the affluent uplands. Longitudinal analyses of Japan, UK and USA since the 1950s show per capita GDP has grown between 3- and 8-fold, but mean levels of well-being remained unchanged. Consumption patterns are now converging on those typical in affluent countries. Indicators for seven baskets of countries: Affluent North America–Europe–Oceania, Affluent Asia, fast developing BRICs and CIVETS, high income Resource Extractors, Poor with Green Peaks, and the Poorest show the factors of consumption between the poorest and affluent (5- to 100-fold) and the fast developing and affluent (2- to 10-fold). A finite planet cannot resource such convergence. One indicator, climate change, grows more of a concern as evidence emerges, yet denial remains strong. A priority is to create opportunities for divergent ways of living. Although material culture has been sought as the means to meet personal well-being, it has failed both the affluent and poorest. A green economy will require human attachments to both place and possessions, thus reducing disposal and damage. Such entanglement produces high affiliation that improves life satisfaction, as does much non-material consumption. As yet, most political and economic systems are far from recognising these imperatives, though there have been notable policy innovations. A shift to a green economy is inevitable. It is simply whether it occurs before or after the world becomes locked into severe climate change and other consequences of harm to natural capital.