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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

    (University of Oxford)

  • Ward, George W.

    (CEP, London School of Economics)

  • De Keulenaer, Femke

    (Ipsos)

  • van Landeghem, Bert

    (University of Sheffield)

  • Kavetsos, Georgios

    (Queen Mary, University of London)

  • Norton, Michael I.

    (Harvard Business School)

Abstract
Are individuals more sensitive to losses than gains in terms of economic growth? Using subjective well-being data, we observe an asymmetry in the way positive and negative economic growth are experienced. We find that measures of life satisfaction and affect are more than twice as sensitive to negative economic growth as compared to positive growth. We use Gallup World Poll data from over 150 countries, BRFSS data on 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 and has 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., 2015. "The Asymmetric Experience of Positive and Negative Economic Growth: Global Evidence Using Subjective Well-Being Data," IZA Discussion Papers 8914, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8914
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    More about this item

    Keywords

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

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • D69 - Microeconomics - - Welfare Economics - - - Other
    • I39 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Other

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