World Economic Forum:
Why busts hurt more than booms help
9 October 2014
We find evidence that the life satisfaction of individuals is between two and eight times more sensitive to negative growth as compared to positive economic growth. People do not psychologically benefit from expansions nearly as much as they suffer from recessions. These results suggest that policymakers seeking to raise wellbeing should focus more on preventing busts than inculcating booms. Our results also offer an explanation for why increases in GDP do not always pay off in increases in happiness - the modest happiness gains accrued over years of growth can be wiped out by just a single year of contraction.
This article was published online by the World Economic Forum on October 9, 2014
Link to article here
Related publications and films
The untold story of the recession: the psychological cost
The psychological cost of a few years of recession can wipe out the benefits of many years of growth. Jan-Emmanuel De Neve of the Centre for Economic Performance explains his latest research on the effect of the recent recession on people's wellbeing.
View here.
'Individual Experience of Positive and Negative Growth is Asymmetric: Evidence from Subjective Well-being Data', Femke De Keulenaer, Jan-Emmanuel De Neve, Georgios Kavetsos, Michael I. Norton, Bert Van Landeghem and George W. Ward, Centre for Economic Performance Discussion Paper No. 1304, October 2014
Related links
Jan-Emmanuel De Neve webpage
Wellbeing Programme webpage