Abstract
This paper studies the determinants of changes in unhappiness rate (low happiness, poverty of happiness, misery) over time. We focus on two post-socialist countries, Poland and Russia, which experienced radical social and economic transformations since the collapse of communism. Using data from the Polish Social Diagnosis project for 1991-2015 and data from the Russian Longitudinal Monitoring Survey for 1994-2014, we investigate the microeconomic determinants of spectacular declines in unhappiness rates observed in the studied periods in Poland (a 56% fall in unhappiness) and Russia (a drop in the range from 46 to 75% depending on the unhappiness threshold chosen). Using a nonlinear decomposition methodology, we split the overall decreases in unhappiness rates into characteristics effects (related to the changing distribution of unhappiness-affecting factors) and coefficients effects (due to changing returns to the unhappiness-affecting factors). Our results show that unhappiness reductions in both countries were mostly driven by coefficient effects, while characteristics played a smaller, but a non-negligible role. In both countries, income growth accounted for about 15% of the total unhappiness reduction. In Russia, this effect was doubled by growing return to income as unhappiness-protecting factor, while in Poland income has been losing protecting power and in overall income had an unhappiness-increasing effect. For Russia, another strong unhappiness-protecting factor was return to employment. In case of Poland, good self-rated health and having children explains additional 15-20% of the unhappiness reduction.
Highlights
In recent years, the problem of distribution of self-rated happiness has become a growing field of study at the intersection of economics of happiness (Dolan et al 2008; MacKerron 2012; Weimann et al 2015) and traditional literature on income poverty and inequality
This paper contributes to the literature on self-rated happiness and unhappiness by investigating the microeconomic determinants of changes in unhappiness over time
We have used a detailed decomposition methodology that allows to split the overall change in unhappiness into the detailed characteristics and coefficients effects
Summary
The problem of distribution of self-rated happiness has become a growing field of study at the intersection of economics of happiness (Dolan et al 2008; MacKerron 2012; Weimann et al 2015) and traditional literature on income poverty and inequality. The decomposition applied to nonlinear regressions for the probability of being unhappy allows to measure how the differences in the demographic, social, economic and labour characteristics of individuals and households contribute to the change in aggregate unhappiness rate over time. The advantage of the Yun’s (2004, 2005, 2008) methodology is that it provides the so-called detailed decomposition for both characteristics and coefficient effects into individual effects, which identify the separate contributions of each individual covariate affecting unhappiness.2 This allows to formulate specific policy recommendations (concerning policies related to education, labour market, inequality or poverty, etc.) that would minimize avoidable misery (Lelkes 2013).
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