The Impact of Economic Crisis on Happiness
- 2.8k Downloads
There is a common belief that economic crisis will lead to a decrease in subjective wellbeing. Previous studies indicate that income is correlated with happiness and unemployment with unhappiness. The relationship between increased income and happiness is well documented while the impact of decreased income has been less explored. The aim of this paper is to study how the economic downfall in Iceland, followed by reduced income and increased unemployment, affects happiness as well as to explore which groups are most vulnerable to changes in happiness and which are most resilient. The study is a longitudinal, nationally representative postal survey which assessed 5,918 individual’s aged 18–79. A total of 4,092 (77.3%) answered again in 2009. The relationship between economic factors and happiness was explored using multiple linear regression to find out how much they explain of the happiness variance and the changes in happiness, together with demographic factors, health and social relationships. Results indicate that income and unemployment did not predict happiness but financial difficulties did. A decrease in happiness was detected after the collapse. The change in happiness from 2007 to 2009 was normally distributed, 40% had the same score in both years and an equal number increased as decreased. The explored factors did not explain the changes in happiness. The economic crisis had a limited affect on happiness. Those with financial difficulties were hardest hit. Changes in happiness need to be studied further since they are not well explained by the factors which influence cross-sectional levels of happiness.
KeywordsHappiness Subjective wellbeing Economic crises Income Unemployment
This work was supported by a grant from “The Icelandic Research Fund for Graduate Students”. I would like to thank Felicia Huppert for her inspiration, editorial comments and supervision and Stefan H. Jonsson, Daniel Olason and Kai Ruggeri for statistical advice and editorial comments.
Conflict of interest
- Argyle, M. (1999). Causes and correlates of happiness. In D. Kahneman, E. Diener, & N. Schwarz (Eds.), Well-being: The foundations of hedonic psychology (pp. 392–412). New York: Russell Sage Foundation.Google Scholar
- Argyle, M. (2001). The psychology of happiness (2nd ed.). London: Routledge.Google Scholar
- Bentham, J. (1789/1996). An Introduction of the principles of morals and legislation. Oxford: Clarendon Press. (Originally from 1789).Google Scholar
- Biswas-Diener, R., Vittersø, J., & Diener, E. (2005). Most people are pretty happy, but there is cultural variation: The Inughuit, the Amish, and the Maasai. Journal of Happiness Studies, 6, 205–226.Google Scholar
- Crabtree, S (2010). Britons’ wellbeing stable through economic crisis: Life ratings, health measures prove resilient during recession. Retrieved February 2, 2011, from http://www.gallup.com/poll/144938/Britons-Wellbeing-Stable-Economic-Crisis.aspx.
- Diener, E. (Ed.). (2009). The science of well-being. New York: Springer.Google Scholar
- Diener, E., & Chan, M. (2010). Happy people live longer: Subjective well-being contributes to health and longevity. Paper being revised. Retrieved November 10, 2011, from http://internal.psychology.illinois.edu/~ediener/.
- Directorate of Labour. (2008). The Right to unemployment benefits. Retrieved June 22, 2011, from http://www.eures.is/files/Rau%C3%B0i%20b%C3%A6klingurinn%20%C3%A1%20ensku_1575575153.pdf.
- English, C. (2009). Crisis hurts financial institutions’ credibility in Europe: Confidence declines in 10 of 12 nations since economic downturn. Retrieved February 2, 2011, from http://www.gallup.com/poll/123482/Crisis-Hurts-Financial-Institutions-Credibility-Europe.aspx.
- Frey, B. S., & Stuzer, A. (2002). Happiness and economics. New Jersey: Princeton University Press.Google Scholar
- Gallup. (2009). Gallup-healthways well-being index: Methodology report for indexes. Retrieved January 22, 2011, from http://www.well-beingindex.com/files/Gallup%Healthways%20Index%20Methodology%20Report%20FINAL%203-25-08.pdf.
- Gudmundsdottir, D. G. (2007). Subjective well-being in Iceland: The impact of demographic factors, social relationships, health and depression on subjective well-being in Iceland. Aarhus University, Psykologisk Institut.Google Scholar
- Gudmundsdottir, D. G. (2009). Happiness in times of crises. The Public Health Institute of Iceland. Retrieved June 22, 2011, from http://www2.lydheilsustod.is/frettir/afstofnuninni/nr/2827.
- Haarde, G. (2008). Address to the Nation by H.E. Geir H. Haarde, Prime Minister of Iceland. October 6th 2008. Prime Minister’s Office. Retrieved June 22, 2011, from http://eng.forsaetisraduneyti.is/news-and-articles/nr/3035.
- Huppert, F. A., Baylis, N., & Keverne, B. (Eds.). (2005). The science of well-being. Oxford: Oxford University Press.Google Scholar
- Huppert, F. A., & Willoughby, A. (2010). The big flourishing society. Government Briefing document, September 2010.Google Scholar
- Ingelhart, R. F. (1990). Culture shift in advanced industrial society. Princeton, NJ: Princeton University Press.Google Scholar
- Jefferson, T. (1776). The declaration of independence. USA.Google Scholar
- Jonsson, S. H., Gudlaugsson, J. O., Gylfason, H. F., & Gudmundsdottir, D. G. (2011). Health and well-being of icelanders—Project report. Public Health Institute of Iceland, Reykjavik. Retrieved May 24, 2011 at http://www.lydheilsustod.is/media/lydheilsa/heilsufarskonnun/Heilsa.og.lidan.Islendinga.2007.Framkvaemdaskyrsla.pdf.
- Laaksonen, E., Martikainen, P., Lallukka, T., Lahelma, E., Ferrie, J., Rahkonen, O., et al. (2009). Economic difficulties and common mental disorders among Finnish and British white-collar employees: The contribution of social and behavioural factors. Journal of Epidemiol Community Health, 63(6), 439–446.CrossRefGoogle Scholar
- Layard, R. (2005). Happiness: Lessons from a new science. London: Penguin.Google Scholar
- Mendes, E., & Krogmeier, M. (2010). One million surveys reveal portrait of Americans’ well-being: Surveys tell a story of economic devastation, increasing health problems, American resiliency. Retrieved June 22, 2011 from, http://www.well-beingindex.com/findings.asp.
- Michaelson, J., Abdallah, S., Steuer, N., Thompson, S., & Marks, N. (2009). National accounts of well-being: Bringing real wealth onto the balance sheet. London: New Economics Foundation.Google Scholar
- Myers, D. G. (1992). The pursuit of happiness. New York: William Morrow and Company.Google Scholar
- Oesch, D., & Lipps, O. (2011). Does unemployemnt hurt less if there is more of it around? A panel analysis of life satisfaction in Germany and Switzerland. SOEPpaper on Multidisciplinary Panel Data Research. Retrieved November 9, 2011 from, http://www.diw.de/documents/publikationen/73/diw_01.c.377429.de/diw_sp0393.pdf.
- Petersen, E. (1989). Did the crisis really hurt the Danes? In R. Veenhoven & A. Hagenaars (Eds.), Did the crisis really hurt? Effects of the 1980–1982 economic recession on satisfaction, mental health and mortality (pp. 64–93). Rotterdam: Universitaire Pers.Google Scholar
- Petersen, E., Kristensen, S. O., & Sabroe, K. E. (1987). Danskernes tilvaerelse under krisen (The Danes during the crisis), Vol. I: Studier i krisens psykologiske virkninger (Studies in the psychological effects of the crisis). Aarhus: Aarhus Universiteitsforlag.Google Scholar
- Reis, H. T. (1984). Social interaction and well-being. In S. Duck (Ed.), Personal relationships (Vol. 5, pp. 21–45). London: Academic Press.Google Scholar
- Reis, H. T. (2001). Relationship experiences and emotional well-being. In C. D. Ryff & B. H. Singer (Eds.), Emotion, social relationships, and health (pp. 57–86). New York: Oxford University Press.Google Scholar
- Seligman, M. (2011). Flourish. New York: Simon & Schuster.Google Scholar
- Statistics Iceland. (2011). Statistical yearbook of Iceland. Retrieved January 25, 2011 from, http://www.statice.is/pages/2532.
- Stiglitz, J., Sen, A., & Fitoussi, J. P. (2009). Report by the commission on the measurement of economic performance and social progress. Retrieved May 25, 2011 from, http://www.stiglitz-sen-fitoussi.fr/documents/rapport_anglais.pdf.
- Tabachnick, B. G., & Fidell, L. S. (2001). Using multivariate statistics (4th ed.). Boston: Allyn & Bacon.Google Scholar
- Veenhoven, R. (2011) World database of happiness, Erasmus University Rotterdam. Available at http://worlddatabaseofhappiness.eur.nl. Accessed at 25 June 2011.
- Veenhoven, R., & Hagenaars, A. (Eds.). (1989). Did the crisis really hurt? Effects of the 1980–1982 economic recession on satisfaction, mental health and mortality. Rotterdam: Universitaire Pers.Google Scholar
- Viinamaki, H., Hintikka, J., Kontula, O., Niskanen, L., & Koskela, K. (2000). Mental health at population level during an economic recession in Finland. Nordic Journal of Psychiatry 54, 177–182. http://informahealthcare.com/doi/abs/10.1080/080394800750019079.
- Warr, P. (2007). Work, happiness, and unhappiness. New Jersey: Lawrence Erlbaum Associates.Google Scholar
- WDH (2011) World database of happiness, continuous register of scientific research on subjective appreciation of life. Erasmus University Rotterdam, The Netherlands. http://worlddatabaseofhappiness.eur.nl.
- WHO. (2009). Financial crisis and global health: Report of a high-level consultation. Geneva: World Health Organization.Google Scholar