Essays on the Influence of the Environment on Life Satisfaction: Evidence from Australia

Abstract

The environment in which the majority of Australians live is likely to undergo rapid change due to the pressures of population growth, economic growth and urbanisation. It is, therefore, useful to understand the extent to which well-being depends on this environment. Employing data from the Household, Income and Labour Dynamics in Australia survey and Geographic Information Systems, this thesis investigates the extent to which a number of environmental factors affect an individual’s self-reported life satisfaction. Environmental factors considered include: scenic amenity, air pollution, ecosystem diversity, protected areas and public greenspace. In doing so, this thesis extends existing literature on the economics of happiness as well as the literature devoted to valuing non-market goods and services. Research into life satisfaction (or happiness) is increasingly the foci of a great deal of empirical investigation in economics. This research has been motivated, at least in part, by dissatisfaction with traditional means of measuring economic progress, as clearly evidenced by the findings of the Report by the Commission on the Measurement of Economic Performance and Social Progress (Stiglitz, Sen, & Fitoussi, 2009). This area of research also reflects a broader re-evaluation of the epistemological foundations of economics, as seen in 2002 by Daniel Kahneman and Vernon Smith together being awarded the Nobel Prize in Economic Sciences.