Economics

Economics
There was studied the real effect of economics on subjective well being. It was based on a survey among 918 students, who study economics and also other social sciences. And, as a fact, there was found good and positive relationship between the study of economics and individual well-being. As well, there has been also found out, that the most important points of happiness for participants of the current survey were their future job chances, their income and also political attitudes.

Probably one of the more exciting changes in economic science, at least in recent times, has been the (re-)introduction of the notion of happiness into economics. While traditionally (neoclassical) economists have almost exclusively focused on wealth, consumption or other monetary aggregates to measure individuals’ well-being, more and more economists now adopt the subjective notion of self-reported happiness to analyze how economic factors such as income, wealth, and employment as well as non-economic factors such as personality traits and socio-demographic factors affect individuals’ well-being or, to be plain, their utility.

Without going into the details of the burgeoning literature on the economics of happiness, is is rather surprising that, to the best of our knowledge, nobody has never studied yet the happiness of economists. This is even more surprising if to consider the fact that it can be regarded as a well established fact by now that economists are different from other individuals in many aspects. These aspects include economist’s opinions, their value systems and also their behaviour in many situations. As a fact, there is an extensive body of literature demonstrating that economists are different from other individuals in a variety of ways.

During the 2005 summer term a survey among 918 students of economics and other social sciences was carried out at the Ruhr-University of Bochum in Germany. The students from these two disciplines face very similar study conditions as they study in large cohorts and have similarly sized lecture groups. They also face a very comparable ratio of students per teacher which differentiates them from most other disciplines such as natural science, engineering or most humanities. The main focus of the survey was on the students’ behavior and attitudes, but students were also asked about their life satisfaction in general - happiness. Furthermore, the survey contained a number of questions on the following issues:

1. Socio-economic background (age, sex, siblings, income, religion, politi-
cal attitudes),
2. future career perspectives,
3. study specific questions (study behavior and attitudes).

A large share of survey participants is "happy" following our definition, for example their self-reported value of life satisfaction is at least seven. In terms of this definition, a share of 60% is happy or has a high level of life satisfaction (7-10). If we split our sample to investigate possible differences between the two different subgroups, there may not appear to be major differences at first sight. As can been seen the relative number of students who consider themselves as relatively happy differs between economics and social sciences students. The share of happy economics students is five percentage points higher than the share of social sciences students.

Econometric Strategy. Model Choice. In order to estimate determinants of individual well-being a person has to formalize subjective well-being, which is not easy at all. A possibility to formalize happiness is the following function of subjective well-being which is regularly
used in empirical studies, for example in Blanchflower and Oswald.

Econometric Problems. The instruments for this were used, such as students’ religion, their rating of fellow students and fairness, also the fact, if they received study materials from fellow students. Empirical studies on the cooperative behavior of economists show that there are significant differences between economists, cooperative behavior and the cooperative behavior of other students. Our instrumental variables provide a good impression on the participants, their
own cooperative behavior and the behavior of their fellow students. As a result, these instruments are promising variables to solve endogeneity problems. Using individuals’ personal attitudes as instrumental variables is not an ad hoc decision, but based on substantive research in labor and conflict economics where personal decisions regularly cause endogeneity problems.

Estimation Results. Before we report our main results, here is a brief discussion of the validity of the instruments. With one exemption in the first stage regression for SOSCI, all instrumental variables are statistically significant in the first stage regressions. This is a strong indicator for the validity of our results. In the following regressions we estimate the effects of different fields of study on subjective well-being. The dependent variable HAPPY takes a value one if the happiness value is reported to be at least seven, which is commonly used as an approximation for life satisfaction, and a value of zero in all other cases. Furthermore, we control for further socio-economic aspects such as income and number of siblings. Put differently, the vast majority in our sample is simply too young to find the U-shaped relationship between age and happiness. In fact, there is not enough heterogeneity between our students to yield any significant age effects at all.

This paper basically combines these two streams of research and asks whether economics students are happier or less happy than other students. As we control for the endogeneity of study subject choice, our paper is a first attempt to answer the question whether studying economics is a good thing from a happiness perspective, or put differently, whether the study of economics affects individual happiness in any way?

Studying economics has positive effects on self-reported well-being while studying social sciences has negative effects on individual well-being compared to economics. This is good news to anybody involved in teaching economics. Additionally, an important finding is the strong positive effect of income on subjective well-being. Despite the findings of modern behavioral economics that well-being depends on more than money, an increase in income is still an important driver for individual life satisfaction, at least for low income levels. It has been also found that happiness is also positively affected by positive career perspectives, which may also be interpreted as a measure of future income. Furthermore, it is interesting to find out that more conservative students appear to be less happy in our survey. To conclude, while income and future job chances are the main drivers of happiness for students in our sample, studying economics also increases students’ life satisfaction.

References

Chairman Ben S. Bernanke (2010). The Economics of Happiness.
How economists measure happiness (2006).
The Happiness of Economists: Estimating the Causal Effect of Studying Economics on Subjective Well-Being (2010).
Wired (2010). The True Measure of Success.

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