The relationship between happiness, health, and socioeconomic factors: Results based on Swedish microdata.(Statistical Data Included)

Ulf-G Gerdtham (a,*)

Magnus Johannesson (b)

Abstract

This paper investigates the relationship between happiness (utility) and a host of socio-economic variables in a random sample of over 5,000 individuals from the Swedish adult population. The results show that happiness increases with income, health and education and decreases with unemployment, urbanisation, being single, and male gender. The relationship between age and happiness is U-shaped, with happiness being lowest in the age-group 45--64 years. [c] 2002 Elsevier Science Inc. All rights reserved.

JEL classification: D60, 131, 112

Keywords: Happiness; Utility; Health; Socioeconomic factors

1. Introduction

The realization that interpersonal comparisons are necessary for normative issues of economic policy has led to renewed interest in Bentham's concept of measurable and interpersonally comparable utility (Kahneman et al., 1997). In line with this interpretation of utility there has been an increased interest in studies assessing the relationship between socio-economics factors and happiness (Theodossiou, 1998; Winkelmann and Winkelmann, 1998; Clark and Oswald, 1994).

The aim of this note is to assess the relationship between happiness and socio-economic variables, with a special emphasis on health. (1) Health status is a factor that can be expected to be an especially important determinant of happiness. Since a number of socio-economic variables may be important for both health status and happiness, we estimate both the direct effect of a variable on happiness and the indirect effect through its impact on health status.

2. Data and methods

Health is likely to be an important determinant of happiness (utility) and since socioeconomic factors like education and income may affect both health and happiness, we estimate both the direct and the indirect effects of the socio-economic factors on happiness. To estimate the direct effects of the socio-economic factors on happiness we estimate one equation controlling for health status (structural form model) and to estimate the total effects we estimate one model excluding health status (reduced form model).

The analysis is based on data from a random sample of the Swedish population, the Level of Living …