Working Paper: NBER ID: w9619
Authors: Justin Wolfers
Abstract: This paper analyzes the effects of business cycle volatility on measures of subjective well-being, including self-reported happiness and life satisfaction. I find robust evidence that high inflation and, to a greater extent, unemployment lower perceived well-being. Greater macroeconomic volatility also undermines well-being. These effects are moderate but important: eliminating unemployment volatility would raise well-being by an amount roughly equal to that from lowering the average level of unemployment by a quarter of a percentage point. The effects of inflation volatility on well-being are less easy to detect and are likely smaller.
Keywords: No keywords provided
JEL Codes: D60; D63; E31; E32; E61; E65; J28; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| High Unemployment (J64) | Subjective Wellbeing (I31) |
| High Inflation (E31) | Subjective Wellbeing (I31) |
| Aggregate Unemployment Volatility (J64) | Subjective Wellbeing (I31) |
| Inflation Volatility (E31) | Subjective Wellbeing (I31) |