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The asymmetric experience of positive and negative economic growth: global evidence using subjective well-being data

Author

Listed:
  • De Neve, Jan-Emmanuel
  • Ward, George W.
  • de Keulenaer, Femke
  • van Landeghem, Bert
  • Kavetsos, Georgios
  • Norton, Michael I.
Abstract
Are individuals more sensitive to losses than gains in macroeconomic growth? Using subjective well-being measures across three large data sets, we observe an asymmetry in the way positive and negative economic growth are experienced, with losses having more than twice as much impact on individual happiness as compared to equivalent gains. We use Gallup World Poll data drawn from 151 countries, BRFSS data taken from a representative sample of 2.5 million US respondents, and Eurobarometer data that cover multiple business cycles over four decades. This research provides a new perspective on the welfare cost of business cycles with implications for growth policy and our understanding of the long-run relationship between GDP and subjective well-being.

Suggested Citation

  • De Neve, Jan-Emmanuel & Ward, George W. & de Keulenaer, Femke & van Landeghem, Bert & Kavetsos, Georgios & Norton, Michael I., 2014. "The asymmetric experience of positive and negative economic growth: global evidence using subjective well-being data," LSE Research Online Documents on Economics 60054, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:60054
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    More about this item

    Keywords

    economic growth; business cycles; subjective well-being; loss aversion;
    All these keywords.

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • D69 - Microeconomics - - Welfare Economics - - - Other
    • I39 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Other
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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