Haifang Huang

International Evidence on the Social Context of Well-Being

This paper uses the first three waves of the Gallup World Poll to investigate differences across countries, cultures and regions in the factors linked to life satisfaction, paying special attention to the social context. Our principal findings are: First, using the larger pooled sample, we find that answers to the satisfaction with life and Cantril ladder questions provide consistent views of what constitutes a good life, with an average of the two measures providing a clearer picture than either measure on its own. Second, we find strong evidence for the importance of both income and social context variables in explaining within-country and international differences in well-being. For most specifications tested, the combined effects of a few measures of the social and institutional context are as large as those of income in explaining both international and intra-national differences in life satisfaction. Third, the very significant influences of both income and social factors permit the calculation of compensating differentials for social factors. We find very large income-equivalent values for key measures of the social context. Fourth, the international similarity of the estimated equations suggests that the large international differences in average life evaluations are not due to different approaches to the meaning of a good life, but to differing social, institutional, and economic life circumstances.

NEW MEASURES OF THE COSTS OF UNEMPLOYMENT: EVIDENCE FROM THE SUBJECTIVE WELL‐BEING OF 3.3 MILLION AMERICANS

Using two large US surveys, we estimate the effects of unemployment on the subjective well-being of the unemployed and the rest of the population. For the unemployed, the non-pecuniary costs of unemployment are several times as large as those due to lower incomes, while the indirect effect at the population level is fifteen times as large. For those who are still employed, a one percentage point increase in local unemployment has an impact on well-being roughly equivalent to a four percent decline in household income. We also find evidence indicating that job security is an important channel for the indirect effects of unemployment.

Comparing the Happiness Effects of Real and On-line Friends

A recent large Canadian survey permits us to compare face-to-face (‘real-life’) and on-line social networks as sources of subjective well-being. The sample of 5,000 is drawn randomly from an on-line pool of respondents, a group well placed to have and value on-line friendships. We find three key results. First, the number of real-life friends is positively correlated with subjective well-being (SWB) even after controlling for income, demographic variables and personality differences. Doubling the number of friends in real life has an equivalent effect on well-being as a 50% increase in income. Second, the size of online networks is largely uncorrelated with subjective well-being. Third, we find that real-life friends are much more important for people who are single, divorced, separated or widowed than they are for people who are married or living with a partner. Findings from large international surveys (the European Social Surveys 2002–2008) are used to confirm the importance of real-life social networks to SWB; they also indicate a significantly smaller value of social networks to married or partnered couples.

How’s the Job? Are Trust and Social Capital Neglected Workplace Investments?

This chapter investigates trust and social capital as potentially beneficial yet neglected investments in the workplace. We define social capital as networks together with shared norms, values and understandings that facilitate co-operation within or among groups. We use subjective measures of life satisfaction to value the climate of trust in the workplace, set in the context of life as a whole. Using data from two separate Canadian surveys, and one large US survey, we find that the climate of trust in the workplace is strongly related to subjective wellbeing, even after allowing for individual personality differences. For example, results from one of the surveys suggests that moving one point on a 10-point scale of workplace trust affects life satisfaction about the same amount as a 40% change in income. The size of these effects, often referred to as compensating differentials, suggest unrecognized opportunities for managers and employees to increase satisfaction and productivity by building better workplaces. Throughout the chapter, we examine the determinants of workplace trust and explore differences among subgroups of workers. We also consider why such large unrecognized opportunities for improving

From Housing Bust to Credit Crunch: Evidence from Small Business Loans

This paper provides evidence that the 20072009 housing bust in the United States precipitated a credit crunch for small businesses. To remove demand-driven correlations, we rely on within-city comparisons. We ask whether banks whose mortgage portfolios were more heavily weighted in harder-hit cities cut back lending to a greater extent in all cities where they make small business loans, relative to other banks in those cities. The evidence is consistent with a credit crunch. Large banks reacted with heavier cuts, but consistent evidence is also found among smaller banks. Quantitatively, the detected contribution to the overall decline in lending from the crunch appears modest.