The Origins of Happiness

Work and Unemployment

But the spillovers on the rest of the population are severe.

So if we look at the total well- being cost when a person

becomes unemployed, it is 0.7 points for the unemployed

person and another 2.0 points in aggregate among the rest

of the population.^15

From this analysis, unemployment emerges as an unal-

loyed bad. It reduces well- being and is not mitigated by ha-

bituation or by social comparisons.

Causes of Individual Unemployment

But what determines which individuals become unem-

ployed?^16 The main issue is to explain who has a history

of unemployment, not who is unemployed at a particular

moment. To explain lifetime well- being, we need to ex-

plain lifetime unemployment— or at any rate the amount

Table 4.4. How life- satisfaction (0– 10) is affected by your own unemployment and

by the regional unemployment rate (household panel data) (pooled cross- section)

Units Britain Germany Australia USA

Own unem-
ployment

1, 0 −0.73 (.09) −0.93 (.07) −0.48 (.11) −0.49 (.06)

Regional
unemploy-
ment rate

0– 1 −1.38 (.56) −1.58 (.36) −0.37 (.42) −1.44 (.47)

Regional
unemploy-
ment rate ×
own unem-
ployment

(0– 1) × (1, 0) 0.38 (1.36) −0.67 (.75) 2.85 (1.74) 0.93 (1.18)

Note: Regional unemployment rate is for same age group and gender.