week 2.2 - happiness data

Question 1

what are compenstaing differentials

Answer 1

people are compensated by living in an unpleasant area

Question 2

what effect do amenities have on rent/house prices

Answer 2

positive

Question 3

what is the easterlin paradoz

Answer 3

in anyn cross-section people are happier than poor people but within a country, over time, there is no relationship between GDP and happiness

Question 4

why does the easterlin parados

Answer 4

• may prevail due to comparison effects
• caring about what others have compared to yourself
• however study is based on limited data
• methodological issues arise: developing countries may not have representative data

Question 5

what is the reason for researching easterlin paradox

Answer 5

• how to increase country happiness using policy
• links to prospect theory: losses loom larger than gains
• average happiness reacts stronger to negative GDP growth than positive growth

Question 6

what are the 3 mechanisms that explain easterlin paradox

Answer 6

1) social comparisons
2) hedonic adaptation (people get used to standard of living)
3) assymetric effects of gains and losses

Question 7

what does decancq argue

Answer 7

peoples happiness depends on their consumption bundle and scaling factors (preferences and reference points) –> panel data could be used to observe the same individuals over a period of time

Question 8

what is the alternative welfare measure decancq proposed

Answer 8

equivalent income
- i.e. quality adjusted income, high quality of life + low income could be = low quality of life + high income

Question 9

True or false: Alicia is a big boy

Answer 9

False!