Wednesday, 24 October, 2012 | 11:30 | Defense

Olga Popova: “Essays on Individual Perceptions of Economic Reforms”

Dissertation Committee:
Lubomír Lízal (chair)
Štěpán Jurajda
Jan Kmenta
Tatyana Kosyaeva



Happiness economics is a relatively new field that has attracted the attention of researchers from many areas. Happiness economics explores the relationships between various economic factors and aspects of individual life and individual well-being. In this field, life satisfaction is frequently used as an indicator of individual well-being. Although subjective data can provide meaningful information regarding different aspects of individual life, their usefulness for policy purposes is still undervalued. In this dissertation, several issues are addressed. First, the impact of two corruption measures, state capture and individual perceptions of corruption, on voters' behavior and on the outcomes of elections is examined. Second, the effects of economic reforms on life satisfaction of religious and non-religious people are analyzed. Third, the impact of the euro introduction on life satisfaction is evaluated.

The first chapter examines to what extent voting behavior of people with different employment status and the distribution of votes are affected by regional differences in corruption. Using data from the Russian Parliamentary (State Duma) Elections of 1999 and 2003, I develop and estimate a SUR system of equations which takes into account specific features of the Russian electoral system. The paper distinguishes between hard and perceived measures of corruption and analyzes the effects of corruption on the shares of votes for particular parties and on voter participation in elections. Additionally, a series of Monte Carlo simulations are performed to analyze the effects of corruption on the distribution of votes.

The second chapter focuses on the effects of reforms and religion on happiness in transition economies. Previous literature suggests that religiousness insures happiness against various individual stressful life events. This phenomenon is well-explored in developed countries but rarely studied in Post-Communist countries where religion was officially suppressed for a long period. These countries have undergone significant economic transformations over the past two decades. Using cross-sectional Life in Transition Survey data and historical data on religions, I examine if religion insures against aggregate shocks to happiness during the transition period. Additionally, the endogeneity of religion is taken into account. The findings suggest that economic reforms may have both positive and negative effects on happiness. Religiousness indeed insures happiness against positive and negative effects of economic reforms during the transition period. Also, religiousness affects perceptions of economic and political situations in these countries positively.

In the third chapter, coauthored with Vladimir Otrachshenko, we analyze the perceived impact of the euro introduction on the life satisfaction of individuals in 17 European economies. Using data from the Eurobarometer surveys and applying the difference-in-differences approach, we explore which groups were primarily affected by the euro introduction and whether the life satisfaction of individuals adapted to the euro introduction within two years. Additionally, we test the association between changes in life satisfaction and perceived changes in prices after the euro introduction. The empirical findings suggest that in most EU12 countries, individuals perceived the euro introduction negatively, while individuals from most new member countries were either not affected or were affected positively. Our results also provide evidence of adaptation to the euro introduction within two years for some groups. These findings are particularly relevant for analyzing public opinion regarding the euro introduction.

Full Text: “Essays on Individual Perceptions of Economic Reforms” by Olga Popova