Relative income concerns and smoking behaviour: The role of unobserved heterogeneity.

Status or relative concerns (as in the idiom 'keeping up with the Joneses') can lead to negative feelings such as stress and anxiety. One key question is whether these concerns relate to daily smoking behaviour. The conjecture is that status concerns and the accompanying stress and anxiety might be associated with a higher likelihood of smoking and a higher number of cigarettes smoked, generating a higher instant physical reward and reducing the stress and anxiety. The literature aiming to identify this relationship focuses mostly on a single cross section of individuals, ignoring potential differences in unobserved characteristics of smokers and non-smokers (e.g., genetic factors, personality differences, parental smoking during childhood). This paper investigates the role of unobserved individual characteristics on this relationship, which has not been done in previous studies. Using a long panel data of smoking information in Germany and a variety of panel data model specifications, we show that there is no statistically significant association between relative income concerns and the likelihood of smoking or the number of cigarettes smoked among the overall population. We find a positive and significant relationship only among people who smoked at least one cigarette in the past. A 10% appreciation in the income of comparable other individuals relates to about 3.5 more cigarettes per month among these people. Importantly, failing to allow for the unobserved influences of smoking leads to three times larger estimates than when using models with unobserved factors correlating to the income and smoking behaviour. The results are robust with respect to alternative assumptions and specifications where we use different functional forms of unobserved heterogeneity, definitions of relative concerns, incomes, and reference groups.

Non-cognitive skills and labour market performance of immigrants.

This paper investigates how non-cognitive skills relate to the relative labour market performance of immigrants. Using the German Socio-Economic Panel (SOEP) and the Five-Factor Model of personality as a proxy for the non-cognitive skills, we show that these skills matter for the labour market integration of immigrants in the host country. We use two comparison benchmarks. Compared to an average native, immigrants' non-cognitive skills, e.g., extroversion or emotional stability, can lead to 5-15 percentage points lower lifetime employment probability disadvantage implying a better overall integration. Comparing immigrants and natives with the same type and level of non-cognitive skills suggests that returns of extroversion and openness to experience are higher among immigrants, leading to 3-5 percentage points lower lifetime employment probability disadvantage. These results are robust with respect to self-selection, non-random returns to the home country, stability of personality, and estimators. Our detailed analysis suggests that non-cognitive skills (especially extroversion) are substitutes for the standard human capital measures (e.g., formal education and training) among low educated immigrants, while there is no significant relative return of non-cognitive skills among highly educated immigrants.

The local and global mental health effects of the Covid-19 pandemic.

This paper investigates the mental health effects of the local and global level Covid-19 pandemic among the UK population. To identify the effect, we use a high-quality dataset and an original strategy where we match the previous day's confirmed pandemic cases to a four-month panel of individual mental health information observed during the interview next day. The approach suggested in this paper aims to identify the average mental health effect on the overall population for the first and second waves of the pandemic. Using a linear fixed-effects model specification, we report robust findings that the average mental health in the UK is substantially reduced by the local and global pandemic. The total reduction in the average mental health of the UK population during our sampling period (April - June, 2020) is about 1.5% for the local and 2.4% for the global cases, which sum up to a 3.9% reduction. Extrapolating the total reduction in average mental health during the first wave of the pandemic (February - September, 2020) sums up to 2.8% while the effect is as large as 9.6% for the first and second waves together, which covers roughly a year since the start. An extensive robustness check suggests that the findings are stable with respect to alternative pandemic datasets, measures, estimators, functional forms, and time functions. The characteristics of the most vulnerable individuals (e.g., elderly, chronic illness, and job security concerns) and their household conditions (e.g., living alone and no private space) are explored. The paper discusses on the implications of the results.

Standing in Others' Shoes: Empathy and Positional Behavior.

Studies show that people are concerned with other people's consumption position in a varying degree with respect to the type of goods consumed and individual characteristics. Using both survey experiments and a large survey of subjective well-being (SWB) dataset, this paper aims to investigate the association between the degree of empathic capacity and positional concerns for consumption items involving pleasure and pain. The paper exploits both empathy quotient (EQ) and interpersonal reactivity index (IRI) measures of empathic capacity, i.e., dispositional empathy, which are sufficient measures capturing affective and cognitive aspects of empathy. Positional concerns are identified directly using a series of stated choice experiments and indirectly using the SWB approach. The main result of the paper is that positional concerns vary substantially with the levels of empathic capacity. Both EQ and IRI are found to be positively associated with positional concerns for "goods" (e.g., after-tax income, market value of a luxury car), reflecting a degree of self-regarded feelings and behavior to reduce personal distress, and negatively associated with positional concerns for "bads" (e.g., working hours and poverty rates), reflecting a degree of other-regarding feelings and behavior. The results are robust with respect to various checks including statistical specifications, reference groups, and omitted variables (e.g., prosocial behavior and competitivity) that could bias the results.

Relative concerns and sleep behavior.

We investigate the relationship between relative concerns with respect to income and the quantity and quality of sleep using a 6-year panel dataset on the sleep behavior of people in Germany. We find a substantial negative association between relative income and number of hours of sleep and satisfaction with sleep, i.e., sleep quality, whereas there is no particular association between absolute level of income and sleep quantity and quality. A 10-percent increase in the income of relevant others is associated with 6-8 min decrease in a person's weekly amount of sleep on average, yet this effect is particularly strong among the relatively deprived, i.e., upward comparers, as this group shows a corresponding decrease in sleeping time of 10-12 min/week. These findings are highly robust to several specification checks, including measures of relative concerns, reference group, income inequality, and local price differences. The heterogeneity analysis reveals that the relationship is mainly driven by people with relatively fewer working hours, a higher demand for household production and leisure activities, and lower physical health and well-being.