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Living Well: Empirical Evaluations of Economic Welfare and Subjective Well-Being

  • Author(s): Horner, Elizabeth Mokyr
  • Advisor(s): Glaser, Jack
  • et al.
Abstract

This thesis presents findings from three related but independent research projects on how policies and programs affect subjective well-being and psychological health, both generally and along specific domains. As I discuss in the Introduction (Chapter 1), the subjective experience is an important component of overall welfare, and tools for measuring Subjective Well-Being (SWB) are well validated. These measures are particularly useful when measuring the impact of policies, programs, and decisions for which income is a poor indicator of well-being.

The first project, "Subjective Well-Being and Retirement: Analysis and Policy Recommendations" (Chapter 2) examines how individual-level happiness is on average influenced by the transition into retirement. By exploiting discontinuities in retirement incentives in 16 countries, an instrumental variables approach is utilized to estimate retirement so that it is exogenous to individual-level characteristics. Removing selection bias reveals a large, short-term positive effect followed by a steep decline. This supports theories of a multi-stage adjustment to retirement. Further, individuals facing later formal retirement experience a boost in SWB that is roughly equivalent in total value to those individual facing earlier retirement, suggesting that raising the formal retirement age is relatively neutral with regard to SWB in the long-term.

The second project, "Whose Fault Is It?: No Fault Divorce and the Decline in Women's Happiness" (Chapter 3) explores the impact of the no-fault revolution, wherein the legal and economic barriers to divorce were drastically reduced in many states throughout the 70s and 80s. I expand upon previous research by including SWB as an important outcome, including overall SWB as well as marital-happiness, a domain-specific SWB measure. I find that women under low-barriers to divorce regimes are significantly less happy than other women, while men are significantly happier.

The final project, "Paradox Lost?: Job Satisfaction, Gender Segregation, and the Paradox of the Contented Female Worker" investigates whether gender segregation has played a role in the well-documented "paradox of the contented female worker" (Crosby, 1982), wherein women report higher job satisfaction despite worse work conditions. Job satisfaction is a domain-specific form of SWB which is particularly important from an economic perspective, as high SWB at work is related to better productivity and lower turnover. I find that both men and women are happier in jobs that are dominated by women, suggesting that men and women may on average be making different decisions with regard to satisfaction / income tradeoffs.

Although the chapters are meant to be stand-alone essays, in concert these papers argue that: 1) SWB is an important outcome variable and high levels of SWB is an important social goal; and 2) policies affect SWB and therefore SWB must be considered in cost-benefit analyses of policy impacts.

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