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

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 Sekulova^a, , , , 


• Jeroen C.J.M. van den Bergh^a, 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

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

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

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Happiness adapts to income decreases after one year.

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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.