Mariano Rojas

Economic Theory and Subjective Well-being: Mexico

Several studies have been conducted on the topic of well-being. Most of them, however, have been done in industrialized countries where income is distributed relatively more equitatively and the population tends to be more homogeneous. This paper studies the relationship between subjective and economic well-being in Mexico, a country where the economic differences among the population are more clearly marked.According to the economic definition of well-being, higher levels of income are associated with higher levels of well-being through greater levels of material consumption. Taking into consideration this definition, it is worth asking just how important income is for an individuals happiness?Existing studies in psychology have found a positive correlation between economic well-being (socioeconomic status) and subjective well-being (happiness). However, this positive relationship is weak and a large percentage of human happiness remains unexplained.Although the mentioned studies make a good approximation of the existing relationship between income and happiness, the characteristics or specification of the function that generates the relationship between these two variables is often assumed to be linear and positive. The main objective of this paper is to investigate further the relationship between subjective and economic well-being. In this study different specifications and approaches are used to approximate the relationship between these variables.An empirical analysis is made from the results of a survey conducted in two Mexican cities. The investigation studies the impact of demographic, social, and economic variables on subjective well-being in Mexico. Several hypotheses are tested to identify the relationship between household income and individual well-being. It is found that income does not have a strong influence on neither well-being nor on the probability of happiness. However, people tend to overstress the impact that additional income would have on their subjective well-being. This fact could explain the importance that people place on increasing their income level, and it could possibly explain the relative sense of dissatisfaction once a higher income level is achieved.The relationship between income and the sense of basic need satisfaction is also explored. A main assumption in economic theory suggests the existence of a direct relationship between these variables; however, empirical results show this relationship to be extremely weak. Results indicate that subjective well-being is positively related to the sense of basic need satisfaction but not to income.

A Subjective Well-being Equivalence Scale for Mexico: Estimation and Poverty and Income-distribution Implications

The estimation of equivalence scales is crucial in cases where a well-being comparison of persons living under different household arrangements is needed: for example, to identify the poor, to calculate poverty rates and to estimate income inequality. In spite of the importance of equivalence scales for economic policy, there is little theoretical guidance on their estimation, and most empirical studies have been carried out in developed countries. Traditional estimation methods have been criticized because of their limitations for making welfare comparisons. This paper uses a subjective well-being approach to estimate equivalence scales. The approach provides an equivalence scale founded on economic satisfaction, which can be used to make welfare comparisons for persons living under different household arrangements—for example, in households of different sizes and with different age composition of household members. The empirical study has been carried out for Mexico using a large database. The implications of the subjective well-being scale for the assessment of poverty and income inequality in Mexico are shown on the basis of a national survey and by comparison with alternative scales.

Transaction Costs in Mexico’s Preferential Credit

In recent years the Mexican economy has undergone a process of financial liberalisation. Interest-rate controls have been abandoned and their determination is left to the market. However, some preferential credit programmes for specially targeted activities, with the financial support of the national development banks, continue to provide credit at subsidised interest rates. Preferential credit is provided mainly by the major development bank, Nacional Financiera, with the objective of promoting activities considered socially important, according to non-market criteria, such as micro and small enterprises, labour-intensive activities, exporting activities, and programmes for industrial modernisation. A fundamental assumption implicit in any preferential-credit programme is that the use of subsidised interest rates will reduce the cost of the financial resources to the benefiting firms. The approach used in this article maintains that the interest rate is not the only cost of credit. There are also costs related to the process of applying for and obtaining the financial resources. These are known as transaction costs and are unavoidable, and there are reasons to believe that in the case of preferential credit they tend to be large. Hence, to evaluate the efficiency of a preferential-credit programme it is necessary to go beyond its purely financial cost — the interest rate. The article aims to evaluate the true cost of the financial resources in a preferential-credit programme, taking into consideration both sets of costs. The investigation covers a preferential-credit programme financed by Nacional Financiera, drawing on data from 125 credit applications collected from the

Price discrimination by pharmaceutical companies across Central American countries

– Price becomes a main instrument for rationing pharmaceutical drugs in Central America as a consequence of pro‐market reforms implemented in the 1980s. Under market‐rationing conditions, peoples access to branded drugs does depend on their purchasing power and on the vector of prices they face. The purpose of this paper is to study the regional pricing strategy followed by pharmaceutical firms across Central American countries. These countries differ in such economic factors as per capita income, income distribution, market size, and nature and extent of their social‐security system; thus, there are conditions that foster the implementation of price‐discrimination practices across the region., – The investigation takes advantage of a large database with information about prices of identical drugs sold across Central American countries and produced by 17 large pharmaceutical companies. Regression analyses are used to study whether price discrimination exists in Central American drug markets and what pricing strategies are followed by different pharmaceutical companies., – Results show that there are significant differences in the prices of identical drugs across the Central American countries, as well as that pharmaceutical companies follow different pricing strategies., – Cross‐country price comparisons are usually based on constructed price indices, which imply losing detailed information about the products being compared. This investigation uses prices of identical drugs, rather than constructed price indices, to study cross‐country price differences by pharmaceutical companies across the Central American region. The study of price discrimination is crucial to understanding how markets end up rationing such an essential product as pharmaceutical drugs.

Poverty and People’s Wellbeing

What is poverty? How poverty relates to people’s wellbeing? The concepts of poverty and of wellbeing are highly intertwined; however, there is little research on how specific conceptions of poverty relate to people’s wellbeing. This chapter revises the prevailing traditions in conceptualizing and assessing people’s wellbeing and how they end up being implemented in poverty studies. The chapter argues in favor of a subjective wellbeing approach to understand and assess people’s wellbeing. It is not only to get people out of poverty; it is also to get them into a life-satisfying situation. Poverty studies would benefit from placing greater attention to the essential experiences of being well people do have as well as to their overall assessment of life. A better theory of wellbeing could emerge on the basis of this information; and this would reflect in social programs that do really impact on people’s wellbeing.

Happiness in Mexico: The Importance of Human Relations

Mexicans are mostly happy, and their happiness level and ranking in the world does not correspond to their income ranking and to their economic problems. This chapter shows that, regarding happiness, there is more to life than standard of living. Relational issues make an important contribution to happiness in Mexico. For this purpose, the chapter follows different venues, such as the study of satisfaction in domains of life, the affective situation of Mexicans, the predominance of non-materialistic values, and the relevance of interpersonal relations. The chapter shows how cultural factors play an important role in the explanation and generation of happiness. Studying people as they are can make an important contribution to cross-cultural studies.

Well-Being in Latin America

Latin America is a vast territory involving many countries, many languages, and many ethnicities but with a common identity. This identity has crystallized through history, geography, and people. History has also produced a legacy of weak political institutions, high concentrations of wealth, and great social exclusion. The recent history of the region reflects efforts made to achieve greater well-being; these efforts have been relatively successful but have also been hampered by obstacles and missteps. People in the region opted for strategies that foster economic growth, thus achieving modest to significant gains in health, education, and material well-being while neglecting other important sources of well-being. Nevertheless, well-being surveys show that most Latin Americans are satisfied with their lives. The major driver of this satisfaction seems to involve family and human relations.

Food-Deprivation and Subjective Well-Being in Latin America

This chapter studies the relationship between food deprivation and subjective well-being (SWB) using a representative database for 19 Latin American countries. The results show that food deprivation is associated to lower SWB. This relationship sustains even when controlling by socio-demographic and income variables. However, experiencing food deprivation does not suffice to ensure experiencing lower SWB; the results show that some people may have relatively high SWB in spite of facing food deprivation. Empirical findings suggest that religion and access to relational goods may contribute to explain the high SWB levels of Latin Americans, even of those who are in hunger.

Leading a life of quality: conceptualizing quality of life

What does it mean to lead a life of quality? This chapter recognizes the importance of discussing measurement issues in the study of people’s quality of life; however, it argues that conceptualization must come first. In other words, thinking about what quality of life is and providing a rationale for its assessment must precede and shape up its measurement. Hence, the chapter does not aim to contribute to the proliferation of quality-of-life indices; its intention is to provide a rationale for the understanding of quality of life. The rationale starts from a basic postulate: human beings have both intrinsic and extrinsic value. These values give rise to two qualities in a person’s life: an inner and an outer quality of life. The chapter states that leading a life of quality requires from people not only to be happy (by leading a life of inner quality), but also to contribute – through their actions – to the happiness of others (by leading a life of outer quality).

Quality of Life in Latin America and the Caribbean

Latin America and the Caribbean is a vast region with a population above 550 million and with an extension above 20 million square kilometers. It goes from the northern 32° parallel to the southern 56° parallel (not considering Antarctic territories). Many languages are spoken in the region, such as Spanish, Portuguese, French, English, Quechua, Guarani, Nahuatl, Aymara, and others. As expected, it is a diverse region; there are significant intercountry differences, as well as substantial intracountry disparities. However, albeit it is vague, there is a general idea of the region as a single entity, and most people in the region can identify themselves as Latin-Americans and as Caribbean. This chapter does not aspire to be exhaustive, since it would be almost impossible to encompass all the relevant issues and all the significant research about quality of life in such a vast and diverse region. Hence, this chapter aims to provide a general overview of some relevant issues about quality of life in Latin America and the Caribbean. Section “The Region” discusses the delimitation of the region. Section “The Quality of Life Situation: Assessment Based on Objective Socioeconomic Indicators” provides a quantitative view of the main quality of life problems in the region. Section “The Quality of Life Situation: Assessment Based on Subjective Well-Being Indicators” follows a subjective well-being perspective to assess the region’s situation. Section “Some Relevant Issues About Latin-American Quality of Life” follows a more qualitative and historical perspective to explain some quality of life problems and to understand the factors that structurally threaten quality of life in the region; it is based on a survey of recent studies. Section “Conclusions” elaborates on the main conclusions.