SSE/EFI Working Paper Series in Economics and Finance
Justina AV Fischer
Competition and well-being: does market competition make people unhappy?
Abstract: Empirical research on the role of economic institutions
for subjective well-being is still widely lacking, while recent
economic-experimental outcomes suggest that experienced utility may depend
on the intensity of market competition. This paper is the first to
empirically analyze the implication of market competition for subjective
well-being using real-life survey data on 80,000 individuals in more than
60 countries from the World Values Survey 1997-2001. In support of our
hypothesis, we find that market competition aggravates the impact of
individual’s bargaining position in economic transactions on her subjective
well-being – compared to the least powerful in society. Put differently, we
find that market competition enlarges the happiness differences caused by
cleavages in socio-economic position. Our results also suggest that
competition induced welfare changes are not gender-specific, while a
stronger rule of law appears to prevent the generation of such additional
benefits or losses. Particularly the latter results call for further
economic-experimental corroboration in the laboratory, but also bear
important policy implications.
Keywords: Subjective well-being; happiness; utility; competition; rule of law; completeness of contract; laboratory experiment; World Values Survey; (follow links to similar papers)
JEL-Codes: C99; D02; D40; I31; (follow links to similar papers)
48 pages, March 20, 2008
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