Schadenfreude: status effects and the well-being of the unemployed

Publication type

Research Paper

Authors

Peter Howley and Sarah Knight

Publication date

Summary

Much recent research in economics and psychology has suggested that it is not just absolute levels of income, health, consumption etc. that affect well-being, but relative position also matters. In this study, we use the UK household Longitudinal Survey to investigate the extent to which the well-being of the unemployed is affected by their relative position. We find that rising rates of neighbourhood unemployment reduces the well-being of the employed, but the opposite is true for the unemployed. We interpret these differences in terms of ‘status’ effects, namely as the unemployment of their neighbours increase, the unemployed may feel relatively better off. Looking beyond average effects, we find that the role of status effects for individual well-being differs sharply depending on personality traits, extent of social ties and gender. Therefore, focusing on ‘average’ effects, as is the norm in the literature to date, will invariably lead to an incomplete and perhaps superficial understanding of the role of status effects for psychological well-being. In terms of broader labour market implications, our findings suggest that differences across space in the adverse well-being effects from unemployment may be a factor behind the often observed spatial clustering of individuals into areas of disadvantage.

Subjects

Area Effects, Psychology, Labour Market, Unemployment and Well Being

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