Well-being and unemployment in Russia in the 1990s: can society's suffering be individuals’ solace?
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This paper studies the effect of regional unemployment rates on subjective well-being in post-Soviet Russia. Research in Europe and the U.S. finds that higher unemployment rates lead to lower reported life-satisfaction. By contrast, our Russian study finds a small but significant effect in the other direction. We estimate that each percentage point increase in the local unemployment rate is correlated with an increase in the average well-being of people in the region which is equivalent to moving 2% of the population up one point on the five-point life satisfaction scale. Our intuition is that when individuals observe their peers suffering in a troubled economy, they lower their standards of what is good enough. All else equal, they perceive themselves to be better off in worse times. This unusual result highlights the role of psychological and contextual factors in mediating responses to economic incentives, particularly in crisis or transition. The dependence of subjective well-being scores on expectations and reference groups cautions against using happiness data from economies in crisis to draw macroeconomic policy conclusions.
JOUR
Eggers, Andrew
Gaddy, Clifford
Graham, Carol
2006
Journal of Socio-Economics
35
2
209-42
10.1016/j.socec.2005.11.059
258
