Hoang and Knabe (2019) on Unemployment and Happiness

Thi Truong An Hoang and Andreas Knabe, “Time Use, Unemployment, and Well-being: an Empirical Analysis Using British Time-use Data.” CESifo Working Paper No. 7581, March 2019.

• Unemployment seems to lower subjective well-being (SWB) when measured as life satisfaction – but most people find the hours spent at their jobs not to be very happy.

• Perhaps the unemployed have better days, on average, than the employed, because the unemployed can shift time away from working and commuting – that is, the unemployed might win at SWB measured as (duration-weighted) affect, while losing in the life satisfaction measure of SWB.

• If an employed person and an unemployed person are both engaged in a leisure activity like listening to music, say, the employed person is likely to receive more satisfaction from it; this reflects the "saddening effect" of unemployment, where holding activities constant, the unemployed receive less pleasure from the activities than do the employed. 

• But the unemployed are able to engage in relatively pleasurable activities more frequently than the employed: this is the "time-composition effect" of unemployment.

• In the authors' British time-use data, the employed hold the edge in life satisfaction and in "life being worthwhile" measures of SWB; work itself seems meaningful, but not particularly enjoyable.

• The unemployed sleep more, and watch tv more. They also spend more time looking for a job, and that is an activity that people do not enjoy.

• Despite the saddening effect of unemployment – when engaging in the same activity, the employed capture more happiness than do the unemployed – the unemployed capture more happiness (affect) in a typical day than do the employed, thanks to the time-composition effect. Working really is not all that happiness-inducing.

• People enjoy weekends more than weekdays, and the weekend bonus is greater for the employed.

• Incidentally, there's some US data that shows significant differences in time use between prime-age men who are not in the labor force versus the unemployed.

• All this work on posting this outline is making me sad.

Quispe-Torreblanca et al. (2019) on Non-fungible Credit Card Bills

Edika G. Quispe-Torreblanca, Neil Stewart, John Gathergood, and George Loewenstein, “The Red, the Black, and the Plastic: Paying Down Credit Card Debt for Hotels, Not Sofas.” Management Science 65(11): 5392-5410, November 2019.

• Is money fungible? Many studies show that the source of money influences how it is spent – for instance, “playing with house money” 

• Consider the repayment of borrowed funds. Presumably the highest interest debt should be most rapidly repaid. 

• But durable goods create a stream of future benefits, so perhaps people can reduce the psychological pain of paying by paying off debts of transient goods more rapidly than debts associated with durable goods. 

• A vacation (a transient good) paid for in advance will be more pleasurable, by this accounting (“prospective accounting”) than the same vacation which is paid for after the fact. 

• People will be more willing to pay interest for a durable good like a clothes dryer. Pre-paying for the dryer does not appreciably raise its hedonic payoff. 

• These mental accounting effects might affect original decisions to make purchases, as well as how repayment occurs.

• A large field experiment is conducted, using UK credit card data. 

• Nondurable goods are indeed much more likely to be paid off at the end of the month than similar bills for durable items – an effect that would be matched by something like a 15% increase in the APR on non-durable debt.

Bell and Blanchflower (2018) on Underemployment and Happiness

David N. F. Bell and David G. Blanchflower, “The Well-Being of the Overemployed and the Underemployed and the Rise in Depression in the UK.” NBER Working Paper No. 24840, July 2018. [A later version appears in the May, 2019 issue of the Journal of Economic Behavior and Organization.]

• Unemployment is very detrimental to subjective well-being (SWB); but what about underemployment? 

• It turns out that in the UK, working fewer hours than you would like to work (at the same rate of pay) also undermines SWB – though not by as much as does poor health or unemployment.

• Overemployment also lowers well-being!

• Though unemployment in the UK has recovered from the 2008 crisis, underemployment has not recovered; earlier this year [2018], it stood at about 3% of the labor force. 

• Incomes and real wages also have not recovered, perhaps because underemployment is a sign of slack in the labor market. 

• Men are more likely than women to be underemployed, and lower wage workers are more likely to desire more hours.  

• Data are drawn from four subjective well-being questions that focus on different conceptions of life assessment: (1) satisfaction; (2) worthiness; (3) happiness; and (4) anxiety. The first three measures show improvements in well-being over the 2011-2017 period; not so for anxiety.

• The usual age effects show up, with well-being minimized at ages 50-54; things again head south after age 75 (but from global highs at 70-74). Retired people display high well-being. 

• Depression is fairly common (and much more so now than ten years ago), with 2.3% of workers being depressed and almost 10% of the unemployed being similarly situated.

Adler, Dolan, and Kavetsos (2018) on Choosing to be Happy

Matthew D. Adler, Paul Dolan, and Georgios Kavetsos, “Would You Choose to be Happy? Tradeoffs between Happiness and the Other Dimensions of Life in a Large Population Survey.” Journal of Economic Behavior & Organization 139: 60-73, July 2017 [pdf].

• Measures of subjective well-being (SWB) come in three different varieties: (1) life satisfaction; (2) happiness (positive/negative affect); and (3) meaningfulness. These varieties are termed, respectively, (1) evaluative; (2) affective; and (3) eudaimonic components of SWB. 

• Decision utility (perceived when making a choice) and experience utility (the quality of lived experience) may differ; SWB seems to be a measure of experience utility. People might purposely choose an option that they know will not maximize their SWB. People might choose options in which their health is good, for instance, even if their SWB is lower than what they could achieve with alternative options.

• Adler, Dolan, and Kavetsos present pairs of options that trade-off SWB with some other characteristic, such as health. These options are presented in “choice” (which of two possible lives would you choose) and “judgement” (which of two possible lives is better) mode. The options are presented as either brief scenarios or (less brief) vignettes; the vignettes are intended to increase the salience of the trade-off presented between SWB and some other life dimension. The three different varieties of SWB are tested separately, and each arrayed against five life characteristics: income, health, family, career, and education. n≈13,000

• The US sample indicates a slightly higher average SWB than the UK sample, though the Americans are more anxious. (And higher anxiety lowers the likelihood of choosing the high SWB option.)

• About 60% of respondents choose the high SWB option. They also seem to be drawn somewhat more to the affective component of SWB. 

• Judgement questions lead to a slightly larger pro-SWB vote than do choice questions, as does presenting the options as vignettes. 

• People possessing higher SWB are more likely to choose the high SWB option. 

• People with children and more education and people who are male are less likely to be seduced by SWB. 

• People often choose good health over high SWB; they rarely choose career success over high SWB.

[John Stuart Mill comes to mind: "Whatever is desired otherwise than as a means to some end beyond itself, and ultimately to happiness, is desired as itself a part of happiness, and is not desired for itself until it has become so." -- from Chapter 4 of Utilitarianism; and the happiness that utilitarianism invokes is the happiness of all interested parties (Chapter 2 of Utilitarianism).] 

[For a related article, see here.]

Adam Oliver on “Nudging, Shoving, and Budging”

Adam Oliver, “Nudging, Shoving, and Budging: Behavioural Economic-Informed Policy.” Public Administration, 2015; doi: 10.1111/padm.12165.

• There is no accepted definition of libertarian paternalism or nudges. As a result, many policies are described to be behavioral despite having little claim to that moniker. You should worry about being pro-nudge, because the nudgers might go way beyond what you think you are signing up for. 

• Oliver claims nudges should present “no” burden on the rationals while attempting to correct an internality. 

• Loss aversion is not something you choose, but something you are, like a White Sox fan [Okay, the White Sox are not actually mentioned in the article.]

• Libertarian paternalism concerns internalities, respects liberty, and employs behavioral means. The British Behavioural Insights Team goes beyond nudging: sometimes it addresses externalities, as with organ donation. Having teenagers mentor toddlers to reduce teen pregnancy is not an obvious behavioural policy, nor is the provision of information about the drinking habits of one’s peers. 

• Straight out paternalism, without the libertarian adjective, is a “shove”; smoking bans are shoves. 

• A “budge” is a behaviorally informed regulatory intervention, designed to counter the misleading nonsense thrown up by profit-seeking corporations, like the payments made by candy makers to grocery stores for check-out line product placement. 

• Maybe it is the opportunity to choose, and not the utility derived from the choices, that is the real measure of welfare.