Friday, 6 November 2009

Children and happiness

Children and happiness, a posting for Eric. One common result from empirical studies on the happiness of people is that the number of children has a negative impact on happiness indicators. The more kids, the lower the happiness of people. This rises an obvious question: Why would people have children? Bad luck? Social pressures? Stupidity? An less obvious answer to this question is that the empirics underlying the result are flawed.

Over at the Economic Logic blog it is noted that
Leonardo Becchetti, Elena Giachin Ricca and Alessandra Pelloni find that the typical way the empirical studies are conducted is flawed. Among the controls, there is usually income. But this make it difficult to disentangle the monetary for the non-monetary impact of children. Using equivalised household income (income adjusted for the number of people in the household) allows to focus only on the impact on happiness, and children now have a positive impact. Decomposing their sample (the German Socio-Economic Panel), they find that opportunity costs do matter. Theory is saved.
So two kids is better than just one.

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