Topics in wellbeing and adaption to health states

The present thesis consists of three chapters in applied micro-econometrics where we analyse wellbeing measurements and adaptation in different contexts. In all three chapters we investigate how wellbeing measurements are affected by different events; the latest recession, budgetary constraints imposed by government as a consequence of the recession, and patients’ adaptation to health condition. In the first chapter, co-authored with Professor Mireia Jofre-Bonet, we analyse the changes in individual wellbeing measurements in the context of the last recession. While most research includes personal characteristics and macroeconomic indicators as determinants of wellbeing, we also include sovereign ratings, as a country’s tag that provides more information on how the country is performing than traditional indicators. Our results indicate that when sovereign ratings increase, individuals are more likely to report higher levels of life satisfaction. The results are confirmed in a diff-in-diff estimation, where we obtain that in those countries where ratings have been dropped after the onset of the recession, people are worse off in terms of life satisfaction. This analysis has also shown an increase in life satisfaction reported after 2010, although macroeconomic indicators remained low. We interpret this result as adaptation to harsh economic situations. The second chapter is co-authored with Professor Mireia Jofre-Bonet, Professor Peter Ayton and Dr. Patricia Cubi-Molla. The topic of the second chapter is adaptation to health states, which is analysed in the context of individuals with amputations. We use a control group to test how differently the general public evaluates quality of life compared to patients, and what explains the difference. We find that the main determinant of the gap between the two valuations is adaptation, inferred as duration since event leading to adaptation. We also find that patients adapt as soon as within the first two years. Based on descriptive statistics, we analyse how well patients can predict their own quality of life and we obtain that those with injury-related amputations predict much closely compared to those with medical-related amputations. Finally, we assess how patients evaluate the quality of life of others with the same condition as themselves. We obtain that the longer the duration since event, the closer amputees evaluate the quality of life of themselves and that of peers. In the third chapter, co-authored with Professor Mireia Jofre-Bonet, we analyse the effects of a government reform on the wellbeing of those affected. Specifically, we look at the wellbeing reported by disabled individuals in the context of the welfare reform started in the UK in 2013. While descriptive statistics show no change in reported wellbeing after the reform was implemented, in empirical setting we obtain that disabled individuals are worse off and more anxious. The effects are higher in disabled individuals receiving benefits who presumably, are the most affected group. The analyses implemented in all three chapters indicate that personal characteristics explain most of the variation in wellbeing, in line with existing research. However, the results obtained here also show that macroeconomic events and government reforms affect people as well, to which they adapt ultimately. This thesis also contributes to empirical methodologies implemented in wellbeing measurements. Most existing research estimates wellbeing with techniques that assume variables have the same effect on all categories of dichotomous variables. However, this assumption is often violated. In this thesis, we have tested the assumption and improved methodology. In our estimations, variables that do not meet this assumption have different effects on the categories of our response variables. This estimation technique allows us to observe whether certain variables determine individuals to choose higher or lower wellbeing scores at different thresholds