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New paper claims reduced personal income from climate policies will only make you unhappy for 1 year

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New paper claims reduced personal income from climate policies will only make you unhappy for 1 year

http://hockeyschtick.blogspot.com/2013/09/new-paper-claims-reduced-personal.html

A paper published today in Global Environmental Change finds that a reduction in income, such as due to climate change policies, causes unhappiness for one year, but don’t worry, after a year you’ll adapt to it and the unhappiness will subside. According to the authors, “effects are however temporary and do not hold for a period longer than a year, probably for reasons of adaptation and a downward adjustment of reference consumption and income levels… Our results suggest that climate policy need not reduce happiness in the long run, even when it reduces income and carbon-intensive consumption.” However, the paper does not mention the effect of climate policies which call for increasing reductions of income and consumption over time. 
 
Climate change, income and happiness: An empirical study for Barcelona

Filka Sekulovaa, , , , 
Jeroen C.J.M. van den Bergha, b, c, 

a Institute for Environmental Science and Technology, Universitat Autònoma de Barcelona, Spain
b ICREA, Barcelona, Spain
c Faculty of Economics and Business Administration, Institute for Environmental Studies, VU University Amsterdam, The Netherlands

Highlights

Experiencing forest fires, has a permanent negative effect on life-satisfaction.

Climate policy which affects income and consumption may not reduce overall happiness.

Happiness adapts to income decreases after one year.

Abstract

The present article builds upon the results of an empirical study exploring key factors which determine life satisfaction in Barcelona. Based on a sample of 840 individuals we first look at the way changes in income, notably income reductions, associated with the current economic situation in Spain, affect subjective well-being. Income decreases which occur with respect to one year ago have a negative effect on happiness when specified in logarithmic terms, and a positive one when specified as a dummy variable (and percentage change). The divergence in results is discussed and various explanations are put forward. Both effects are however temporary and do not hold for a period longer than a year, probably for reasons of adaptation and a downward adjustment of reference consumption and income levels. Next, we examine the implications of experiencing forest fires and find a lasting negative effect on life satisfaction. Our results suggest that climate policy need not reduce happiness in the long run, even when it reduces income and carbon-intensive consumption. Climate policy may even raise life well-being, if accompanied by compensatory measures that decrease formal working hours and reference consumption standards, while maintaining employment security.

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