Italy’s parabolas of GDP and subjective well-being: the role of education (by M.Pugno, published in MPRA)

The rise and decline of the Italian economy over the past 60 years form a surprisingly regular parabola, if the main European partner economies are taken as benchmark, so that its vertex equal to 1 means that Italy completely caught-up Europe around the 1990s. This implies that, in order to repeat that experience of catching-up, Italy needs to grow at extraordinary rates, which are not on the horizon. The paper shows that the Italians’ morale is even in worse conditions and explores why. The analysis firstly focuses on subjective well-being (and other subjective indices), thus finding another parabola and with more worrying features than the economic parabola. Then it explores the role of education in shaping the long-run dynamics of both the economy and subjective well-being. As a first result, the paradox of the excess supply of educated workers in Italy becomes clearer. The second result shows how poor education weakened Italians’ ability to fully enjoy their income, in particular after the shocks of the 1990s. An education policy thus becomes urgent to provide both specialized skills for production and general skills for people’s lives, thus definitively reinforcing the recent weak rebound in educational levels.

(published in MPRA working papers)

Drug decriminalization and well-being (by the World Wellbeing Panel)

For half a decade the World Wellbeing Panel (WWP) has promoted wellbeing as the ultimate purpose of all major decision makers, particularly government.

For the most recent survey, members of the World Wellbeing Panel were asked whether they agreed or disagreed with two statements related to drug decriminalization:

(i) “Decriminalization of drugs initiatives around the world these last 20 years have, on balance, delivered wellbeing gains for their populations” and

(ii) “Further decriminalization of both soft-drugs and hard-drugs, if well-designed, can be expected to lead to net wellbeing gains in the population.”

 

These are their answers.

Intrinsic vs extrinsic motivation to protect the environment (by M. Pugno and F. Sarracino – MPRA paper)

Understanding why many people spontaneously perform pro-environmental behaviours, rather than requiring some incentive, is an active area of research. We contribute to this research by relating intrinsic and extrinsic motivation in pursuing central goals in people’s lives, and specifically in looking for a job, to pro-environmental attitudes and engagements. Using an international sample, we find that intrinsic motivation relates positively and extrinsic motivation relates negatively to a variety of subjective pro-environmental outcomes. This result holds for different sub-samples and for various econometric specifications and methodologies. In particular, two-stage least squares estimation with proper instruments provides evidence of a causal relationship between motivations and pro-environmental outcomes.

Published as downloadable  MPRA working paper.

Structural changes in economic growth and well-being (by M. Pugno and F. Sarracino – published in Social Indicators Research)

diagram-on-swb-in-Italy 1

The controversies on the relationship (or `gradient’) between GDP and subjective well-being oppose those who claim that the gradient is positive and stable around the world to those who argue that long-run trends of subjective well-being are flat despite economic growth. The possible existence of structural breaks of the gradient within the same country is a challenge to both views. By focusing on the case of Italy, we show that the long-run trends of GDP and of well-being turned from increasing to decreasing, and the gradient exhibits a rise through two structural breaks. Macro and micro analyses explain why the gradient changes, and we find evidence consistent with the `loss aversion’ hypothesis. In addition, the gradient changed because the erosion of trust in others, the increase of financial dissatisfaction and worsened health hinder well-being independently from income.

Published in SIR. Previous version as working paper.

Enjoying life takes time and needs people (by Maurizio Pugno, MPRA working paper)

People gain enjoyment from exercising their agency and interacting with others in order to accomplish projects and change reality, as is evident from the successful evolution of homo sapiens. Hence, time can be enjoyable in both pursuing and achieving socially valued goals. Since modern economic progress offers products in growing abundance, thus increasingly exploiting individuals’ time and interaction, people are tempted to seek enjoyment in another way, i.e. in consumption itself, as homo economicus would suggest. On the basis of various evidence, the paper argues that people can choose between these two ways leading to well-being; that the homo economicus way is less effective or even perverse; and that economic progress weakens people’s skill to undertake the homo sapiens way. These arguments help explain why the economy of a country, such as the USA, can grow over decades whereas its citizens become less able to enjoy their lives.

Published in MPRA Paper No. 104378 (downloadable)

On the Foundations of Happiness in Economics: Reinterpreting Tibor Scitovsky by Maurizio Pugno (NOW IN 2018 PAPERBACK EDITION)

cover and endorsements - 5

Economic growth has extraordinarily increased the availability of market goods to satisfy people’s need for comfort, but at the same time it has also raised great challenges to their working, family, and personal lives. Will people learn the skill necessary to cope with these challenges and take full enjoyment from economic growth? The book of Maurizio Pugno explores this question starting from the insights of Tibor Scitovsky (Budapest 1910 – Stanford 2002), and approaching a theory of ‘human welfare’. Along this research line, Amartya Sen’s idea on the centrality of human capacities is developed by modifying the traditional approach of the economic choice. The empirical basis is mainly provided by the recent studies in Economics of Happiness, but also in Behavioural Economics, as well as in the very recent studies of Economics of Human Capital. The most original aspect, however, may be the integration with important concepts of psychology, like motivation, realization of inner potential, and secure social attachment.

cover and endorsements - 5

The book provides, at the same time, a theory on ‘human welfare’, a discussion on how it was conceived by Scitovsky and other economists before him, an account of Economics of Happiness from this perspective, and an application to people’s experience of living in competitive market economies. The unifying concept of the book is learning as an enjoyable and challenging activity. This may enable people to develop the typical human skill, being both social and creative, of setting and pursue the goals that are adequate for their natural dispositions. However, the economic and social conditions are not always favourable to the development of such ‘human welfare’. This may explain why happiness may not improve despite the economic growth.

The book is not only the first and only monograph on Scitovsky. It is also an original proposal of a micro-macro framework that researchers and general readers can use to interpret current trends of happiness, to devise new policies for human development, and to understand people’s personal lives.

Table of Contents

Introduction – 1. Happiness in economics: the roots and perspectives of a research programme – 2. Scitovsky’s research programme on human welfare – 3. Enjoying creative activity by developing life skill – 4. Comfort vs. creative activity as two sources of well-being – 5. Addiction: from well-being to ill-being – 6. Are we heading for a ‘joyless economy’? – A new look at Scitovsky’s concern – 7. Keynes’s ‘Economic possibilities for our grandchildren’: Scitovsky’s suggested new interpretation – 8. Creative activity and well-being for a new economic growth – Conclusions

Endorsements

‘This is a most welcome contribution. Maurizio Pugno makes a valuable effort to introduce and reinterpret the insight by Tibor Scitovsky into Modern Happiness Economics. These insights have wrongly, and to a large extent, been disregarded in the literature. Pugno discusses e.g. the importance of intrinsic motivation and creativity for happiness, opening up a challenging and fruitful direction of research.’ — Bruno S. Frey Permanent Visiting Professor, University of Basel, Switzerland.

     ‘Scitovsky’s pioneering contributions on the relationship between economic growth and human wellbeing have so far not received from modern behavioural and happiness economists the attention they deserve. This should change as a result of Maurizio Pugno’s labour of love that has resulted in this most useful volume that sets Scitosvky’s work in context and presents it in today’s more technical style’ — Peter Earl, University of Queensland, Australia and co-editor of the Journal of Economic Psychology 2000-2003.

For excerpts and commercial information, see the website of the publisher