Michael Tamada sent me notice of a recent study, by Justus Haucap and Ulrich Heimeshoff:
A pair of German economists note that while scholars in their field have vigorously begun analyzing the economics of happiness, no one has studied the happiness of economists themselves. Not till now, anyhow.
Justus Haucap, of Heinrich Heine University of Düsseldorf, and Ulrich Heimeshoff, of the University of Bochum, surveyed 918 students of economics and other social sciences in 2005, then estimated how studying each of the different fields affected individual life satisfaction. They reported their results in a paper titled, "The Happiness of Economists: Estimating the Causal Effect of Studying Economics on Subjective Well-Being."
The news is good – for economics students, anyhow. Applying "innovative instrumental variable methods developed in labor and conflict economics," the researchers identified a positive relationship between the study of economics and individual well-being.
That's German students they surveyed, not American students. The researchers also report that self-described political conservatives (in the German sense) report lower levels of happiness.
They do control for career prospects but if you go to p.9 I do not understand why they chose the instrumental variables they did. The paper itself is here.
I suspect it’s because many econ students are little utilitarians who haven’t found many classes that welcomed their way of thinking. Finding out you’re not crazy or alone is pretty cool.
That or their dropped out engineers who are delighted that they’ll keep their salary prospects without having to pass, thermo, dynamics, o chem, or AC circuits and power theory.
Their IV approach is very very bad. Or at least from what they show in the paper it is bad. No justification for the instruments – I have a lot of doubts about where the instruments are actually exogenous. Plus, look at the appendix first stage. I’m not sure their instruments are strong enough. They need an F-stat of at least 9 or 10 for anyone to even start to believe them. I don’t know that they are anywhere near this and they certainly don’t show it. All they say is that the instruments are “statistically significant.” Is this individually or jointly. It matters if they have multiple instruments. Are they aware an instrument should be more than statistically significant (or at least they then need to start signing biases from weak instruments)?
I try not to be harsh and critical about other people’s empirical work since I know there are plenty of places to punch holes in my own work and use of IV. But, this is one of the worst I have ever seen.
In my experience, studying economics has made me feel increasingly alienated from my peers because they approach problems with such drastically different analytical methodologies.
For example, I hate going to my discussion section for Robert Reich’s public policy class at UC Berkeley. It drives me crazy to have to start from scratch (explaining trade-offs, scarcity, self-interest, etc.) every time I argue that the market provides efficient and ethical solutions to the alleged “problems” we discuss in the course.
Btw, I think the effect of income on happiness comes out in a more reliable way in econometric studies like this one. (If you look at the coefficients, the effect is considerable.) If you go asking people whether they’re happy or not and tell them that it’s for some happiness poll, they may lie (at least to themselves) but when “happiness” is just one variable among many they’re less likely to lie about it.
Education in general would make people happier. People who are educated have a better understanding of the world and how it works. These people can accept the facts and not be bothered, confused, or scared of things they don’t understand. Basic economics class will help students understand how the economy works and they aren’t as stressed as someone else might be during a recession. I don’t know if the economics class is what makes students happy or that college education makes students happy. Maybe economics students are happier because they realize that economics class isn’t as difficult as many people think. Thats what makes me happier as an economics student.
I feel that their study might be a little biased. A group of economists studying the happiness of economists. Its like they are trying to prove something. All the economy majors I know enjoy the fact that they are that major. But then again they are America not German.
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