Essays on cultural economics and subjective well-being

Culture has long been recognised as crucial to economic life, with traits such as trust drawing significant attention from economists. As noted in the literature, “virtually every commercial transaction has within it an element of trust.” A related but distinct strand of inquiry concerns subjective well-being, or happiness, whose significance extends from personal to public life. This thesis explores questions at the intersection of these notions. First: given that culture has deep roots and persists across generations, how is it transmitted? Second: does happiness persist across generations, and if so, through what mechanisms? Third: when individuals face adverse shocks, does happiness recover, and how quickly? In Chapter 1, I demonstrate that culture indeed has deep roots and is shaped by the timing and patterns of human migration out of East Africa – the cradle of humankind. Drawing on insights from the cultural evolution literature, I develop a framework based on the Price equation to argue that social learning is a key mechanism of cultural transmission. Empirical implementation of this framework reveals that social learning explains a substantial and statistically significant portion of cultural gaps at both the individual and country levels. In Chapter 2, drawing on the “Out of Africa” hypothesis, I argue that variation in the time elapsed since different societies shared a common ancestry helps explain global disparities in subjective well-being. Using a pairwise measure that links ancestral distance (proxied by genetic and linguistic distances between societies) to country-level averages of happiness, I find that the absolute difference in subjective well-being between country pairs is positively correlated with their ancestral distance. To examine the mechanisms underlying this association and to address whether happiness transmission mirrors cultural transmission, I again turn to social learning. Modelling well-being transmission via Bayesian inference, I find that social learning is robustly associated with both well-being and ancestral distance, and mediation analysis shows it mediates a portion, but not all, of their association. In Chapter 3, my coauthor Metin Nebiler and I examine whether subjective well-being recovers following adverse events. Using monthly panel data from the World Bank’s “Listening to Kazakhstan” survey, we employ the synthetic control method for an aggregate shock and difference-in-differences for idiosyncratic shocks. The aggregate shock led to a modest decline in life satisfaction, persisting for about three months before returning to baseline. Idiosyncratic shocks also caused a significant decline, but only in the first month.