Essays on the economics of well-being : microeconometric analyses of health and life satisfaction

This dissertation studies the economics of well-being using modern microeconometric techniques and focuses on two specific domains, health and life satisfaction. The thesis first frames the analysis by discussing relevant issues in conceptualising and measuring well-being and by outlining the key concepts in microeconometric evaluation methods used in the analysis. Three self-contained chapters represent the main body of this dissertation. The first study examines the causal effect of family income on child health in the UK using an instrumental variables strategy. We find that income has a very small but significant causal effect on subjective child health and no significant effect on chronic health conditions, apart from respiratory illnesses. We examine the role of potential transmission mechanisms and show that the timing of income does not matter for young children. Moreover, our results provide further evidence that maternal health does not drive a spurious relationship between family income and child health. The policy implication of our study is that financial transfers are unlikely to deliver substantial improvements in child health.The second study investigates the causal effect of smoking bans on self-assessed health in Germany. Using a difference-in-difference design, we find that non-smokers benefit strongly, particularly young non-smokers, and that smokers report no or even negative short-run effects following the introduction of smoking bans. We demonstrate that health improvements for non-smokers materialise largely with the enactment of smoking bans. Our study supports the policy recommendation of introducing smoking bans as a means of improving public health and shows that norm activation may induce compliance with smoking bans even in the absence of formal sanctions. The final study applies the life satisfaction approach to evaluate the welfare effects of the transition in and out of daylight savings time (DST) for both the UK and Germany. Using a regression discontinuity design, we demonstrate that the transition to DST reduces life satisfaction in the first week after the transition for both Germany and the UK. Consistent with economic theory on the shadow price of time, these effects are mainly driven by families with young children in the household. The costs and benefits of the transition back to standard time in autumn seem to offset each other. Our findings suggest that public policy could help time-constrained individuals to adjust more easily by providing them with more flexibility to reallocate their time.