Is irrational thinking associated with lower earnings and happiness?

an article by Shoko Yamane (Osaka University, Toyonaka, Japan), Hiroyasu Yoneda (Keiai University, Chiba-shi, Japan) and Yoshiro Tsutsui (Konan University, Kobe, Japan) published in Mind & Society Volume 18 Issue 1 (June 2019)

Abstract

This study investigates the individual outcomes of irrational thinking, including belief in the paranormal and non-scientific thinking. These modes of thinking are identified through factor analysis of eleven questions asked in a large-scale survey conducted in Japan in 2008. Income and happiness are used as measures of individual performance. We propose two hypotheses.

Previous studies in finance lead us to consider

• Hypothesis 1 that both higher belief in the paranormal and non-scientific thinking are associated with lower income.
• Literature on the association between religion, the paranormal, and happiness suggest Hypothesis 2 that higher belief in the paranormal is associated with greater happiness, while higher non-scientific thinking is associated with greater unhappiness.

To examine these hypotheses, we regress income and happiness on belief in the paranormal and non-scientific thinking with appropriate control variables.

We employ the Mincer-type wage function as the income equation. Income, sex, and age are controlled in the happiness equation. Analysis supports both hypotheses, which highlights the complex features of irrationality.

Although irrationality results in diminishing financial profitability, the component of belief in the paranormal improves the psychological state.

JEL Classification: D03

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Intergenerational mobility across the world: Where socioeconomic status of parents matters the most (and least)

a column by Ambar Narayan and Roy Van der Weide for VOX: CEPR’s Policy Portal

Intergenerational mobility is important for both fairness and economic efficiency in a society.

This column uses data from a new global study spanning five decades to show that average relative mobility is lower in developing economies, with no sign that the gap with developed countries is getting smaller.

In addition, income mobility in several developing economies is much lower than their levels of educational mobility would lead us to expect. Labour market deficiencies appear to be contributing to this gap between mobility in education and income.

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Beauty still matters: The role of attractiveness in labour market outcomes

an article by Petra Anýžová and Petr Matějů (Institute for Social and Economic Analyses, Czech Republic) published in International Sociology Volume 33 Issue 3 (May 2018)

Abstract

The main objective of the study is threefold:

• first, to examine the role of attractiveness in the Czech labour market;
• second, to assess gender differences in returns of attractiveness; and
• third, to show that the positive association between attractiveness and earnings does not disappear even when cognitive skills, social background, occupational status and individual characteristics are controlled for.

The study uses data from the first large-scale sociological survey focusing on attractiveness carried out in the Czech Republic. The results provide strong evidence for the hypothesis that, in general, more attractive people have a better chance of higher socioeconomic occupational status as well as higher incomes than less attractive individuals even when controlling for cognitive skills, social background, occupational status and personality.

However, the analysis also shows that the relationships are different for men and women. The study finds that the income premium for attractiveness is markedly higher among prime-aged women than men.

The authors conclude that there have been profound changes in the last 30-40 years in the Western world and that the importance of physical attractiveness and erotic capital has been increasing, especially for women.

Full text (PDF 23pp)

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2018 risks being a standstill year on pay

a post by Torsten Bell for the Resolution Foundation blog

2018 looks set to be a standstill year. On the biggest political issue of our time we will spend all 365 days of it leaving, but not out of, the EU. It also looks set to be a standstill year for our economy as most people experience it – on pay and employment we may well end it pretty much where we began.

That flat pay may be seen as good news shows quite how far we’ve come as a country. The recent catastrophe of wages in Britain has well and truly managed our expectations. The living standards story of 2017 was the return of shrinking pay packets – still £15 a week below their pre-crisis peak and not forecast to fully recover until 2025. Far from catching back up, we’ve started digging again.

Continue reading

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Breaking the ‘class’ ceiling? Social mobility into Britain's elite occupations

an article by Sam Friedman and Daniel Laurison (London School of Economics and Political Science) and Andrew Miles (University of Manchester) published in The Sociological Review Volume 63 Issue 2 (May 2015)

Abstract

In this paper we use the unusually large sample size of the Great British Class Survey to compare rates of social mobility into different élite occupations. We find a distinction between ‘traditional’ professions, such as law, medicine and finance, which are dominated by the children of higher managers and professionals, and technical or emerging high-status occupations, particularly those related to IT, that appear to recruit more widely.

Second, we find that even when the upwardly mobile are successful in entering élite occupations they invariably fail to accumulate the same economic, cultural and social capital as those from privileged backgrounds.

While many such differences may be explained by inheritance, we also find that the mobile tend to have considerably lower incomes. Investigating this further we demonstrate that even when controlling for important variables such as schooling, education, location, age, and cultural and social capital, the upwardly mobile in eight occupations – located largely in the business sector – have considerably lower incomes than their higher-origin colleagues.

These findings underline the value of analyses of mobility into specific high-status occupations as well as illustrating how, beyond entry, the mobile often face considerable disadvantage within occupations.

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Changes in relative deprivation and social well-being

an article by Jayanta Sen (West Bengal State University, Kolkata, India) and Dipti Prakas Pal (University of Kalyani, India) published in International Journal of Social Economics Volume 40 Issue 6 (2013)

Abstract

Purpose
Individuals earn their income from different sources in an economy. Persons being engaged with different occupations have different income levels. Welfare level thus varies from person to person. Obviously an indignant feeling arises out of interpersonal shortages of income which is viewed as relative deprivation of the person to whom shortages are inflicted. This paper attempts to analyse geometrically inter-temporal variations in relative deprivation.

Design/methodology/approach
Temporal movement has been analysed in terms of iso-deprivation curves.

Findings
Reduction in relative deprivation is the cherished goal of every welfare economy. But how it should be pursued is a matter of concern to the policy makers. In the present analysis five paths are discussed along which the deprivation level may be reduced. The most desirable path is identified.

Originality/value
Different components and their relative contributions to changes in relative deprivation have been identified in a geometrical decomposition framework. The analysis is of use in framing policies for reduction in relative deprivation and increase in social well-being.

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Multiple Disadvantages Among Older Citizens: What a Multidimensional Measure of Poverty Can Show

an article by Emily J. Callander, Deborah J. Schofield and Rupendra N. Shrestha (University of Sydney, Australia) published in Journal of Aging & Social Policy Volume 24 Issue 4 (October – December 2012)

Abstract
Using the newly created Freedom Poverty Measure, a multidimensional measure of poverty, it can be seen that there were 534,700 individuals who were in freedom poverty, who had either poor health or poor education in addition to having low incomes.

This multidimensional disadvantage would not normally be captured by single measures of poverty, such as income poverty measures. Men were significantly less likely to be in freedom poverty than women (OR = 0.63, 95% CI: 0.54–0.74, p <  .0001), and the proportion of individuals in freedom poverty increased with age, with those older than 85 being 2.3 times more likely to be in freedom poverty than those aged 65 to 69 years (95% CI: 1.73–3.11, p < .0001).

Policy responses to address the marginalization of disadvantaged older people should take a multidisciplinary approach, addressing health inequalities in particular, not just low income.

I’m thinking and thinking but I am sure that I have not seen this Freedom Poverty Measure mentioned in anything I have read before.
Google to the rescue!
And, surprise, surprise, it’s the same three authors but in a different publication.

Capacity for Freedom – Using a New Poverty Measure to Look at Regional Differences in Living Standards within Australia

an article by Emily J. Callander, Deborah J. Schofield and Rupendra N. Shrestha (University of Sydney, Australia) published in Geographical Research Volume 50 Issue 4 (November 2012)

Abstract

Using a recently developed measure of multidimensional poverty, the Freedom Poverty Measure, the difference in poverty rates of major cities, inner regional, and other areas have been compared. The population living in ‘other areas’ had the highest proportion of individuals living in freedom poverty.

Those in inner regional areas (P = 0.0303) and those in major cities (P < 0.0001) were significantly less likely to be in freedom poverty than those in ‘other areas’. However, when breaking the analysis down to look at the different poverty rates for different age groups across the three regional classifications, it was found that there was no difference in the likelihood of being in freedom poverty between children in inner regional and other areas, adults in inner regional and other areas, and older people in inner regional and other areas.

This may indicate that the disadvantage experienced by those living in regional centres has been overlooked in the past and is an emerging contemporary issue for health and education equity as well as economic equality.

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