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The impact of inflation and unemployment on subjective personal and country evaluations

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  • Nestor Gandelman
  • Ruben Hernandez-Murillo

Abstract

The authors use data from the Gallup World Poll to analyze what determines individual assessments of past, present, and future personal and country well-being. These measures allow the analysis of two dimensions of happiness data not previously examined in the literature: the better-than-average effect and optimism. The authors find that individuals tend to evaluate their personal well-being as being better than their country's and tend to expect that their future well-being will improve. The authors also analyze the impact of inflation and unemployment on these subjective measures and find that both variables have a negative effect on individuals' assessments of past and present well-being for themselves and their country; in contrast with other studies, however, they do not find that the effect of unemployment is significantly different from that of inflation.

Suggested Citation

  • Nestor Gandelman & Ruben Hernandez-Murillo, 2009. "The impact of inflation and unemployment on subjective personal and country evaluations," Review, Federal Reserve Bank of St. Louis, vol. 91(May), pages 107-126.
    • Handle: RePEc:fip:fedlrv:y:2009:i:may:p:107-126:n:v.91no.3
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    Cited by:

    1. Gandelman, Néstor & Hernández-Murillo, Rubén, 2013. "What do happiness and health satisfaction data tell us about relative risk aversion?," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 301-312.
    2. HASAN, HAMID & Khan, Hayat, 2013. "Testing the Existence of Hedonic Adaptation and Inertia to Income with implications for Islamic economics: a case of Pakistan," MPRA Paper 44927, University Library of Munich, Germany.
    3. Blanchflower, David G & Oswald, Andrew, 2011. "International Happiness," CAGE Online Working Paper Series 39, Competitive Advantage in the Global Economy (CAGE).
    4. Nicholas Apergis & Tasawar Hayat & Tareq Saeed, 2019. "The Role of Happiness in Financial Decisions: Evidence from Financial Portfolio Choice and Five European Countries," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 47(3), pages 343-360, September.
    5. Mª del Salinas-Jiménez & Joaquín Artés & Javier Salinas-Jiménez, 2013. "How Do Educational Attainment and Occupational and Wage-Earner Statuses Affect Life Satisfaction? A Gender Perspective Study," Journal of Happiness Studies, Springer, vol. 14(2), pages 367-388, April.
    6. Yuta J. Masuda & Jason R. Williams & Heather Tallis, 2021. "Does Life Satisfaction Vary with Time and Income? Investigating the Relationship Among Free Time, Income, and Life Satisfaction," Journal of Happiness Studies, Springer, vol. 22(5), pages 2051-2073, June.
    7. Mohammad Mushfiqul Haque MUKIT & Assim Ibrahim ABDEL-RAZZAQ & Mohammad Safiqul ISLAM, 2020. "Relationship between Unemployment and Macroeconomics Aggregates: Evidence from Bangladesh," Journal of Economics and Financial Analysis, Tripal Publishing House, vol. 4(2), pages 45-61.
    8. Stracca, Livio, 2014. "Financial imbalances and household welfare: Empirical evidence from the EU," Journal of Financial Stability, Elsevier, vol. 11(C), pages 82-91.
    9. Malte Hübner & Marcus Klemm, 2015. "Preferences over inflation and unemployment in Europe: a north–south divide?," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 62(4), pages 319-335, December.
    10. Néstor Gandelman & Giorgina Piani, 2013. "Quality of Life Satisfaction among Workers and Non-Workers in Uruguay," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 111(1), pages 97-115, March.
    11. Marcus Klemm, 2022. "Well-being Changes from Year to Year: A Comparison of Current, Remembered and Predicted Life Satisfaction," Journal of Happiness Studies, Springer, vol. 23(4), pages 1669-1681, April.
    12. Ruben Hernandez-Murillo & Christopher J. Martinek, 2010. "The dismal science tackles happiness data," The Regional Economist, Federal Reserve Bank of St. Louis, issue Jan, pages 14-15.
    13. Gregor Gonza & Anže Burger, 2017. "Subjective Well-Being During the 2008 Economic Crisis: Identification of Mediating and Moderating Factors," Journal of Happiness Studies, Springer, vol. 18(6), pages 1763-1797, December.

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    Inflation (Finance); Unemployment;

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