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new study published in PLOS One looked at reactions to macro-level shocks and re-examination of adaptation theory using Big Data

“Our study wanted to determine whether two different types of macro-level shocks (lockdown – endogenous and the invasion of Ukraine – exogenous to the countries under investigation) affected happiness differently,” study author Stephani√© Rossouw told us. “Additionally, we wanted to determine whether adaptation theory, established using survey data on a micro-level, is upheld when you use Big Data at the macro-level.”

The research team knew from previous studies from used survey data that macro-level shocks such as terrorism and natural disasters negatively affect subjective well-being or mental well-being. No one knew before the current study whether macro-level shocks affect happiness measured in real-time using Big Data. Additionally, no one ever analysed two different types of macro-level shocks to see whether the effects on happiness are similar. Furthermore, no one knew whether happiness' adaptation period (if any) was equal regardless of the type of macro-level shock.

“We are well-being economists and established a real-time happiness index by launching our Gross National Happiness Today project in 2019,” Rossouw told us. “Ever since, we have researched the factors that impact countries' happiness. We previously investigated urgent topics such as COVID-19 and vaccine hesitancy. When the invasion of Ukraine happened, we found ourselves in a unique position to have real-time happiness data, which allowed us to compare the effect of two different types of shock on happiness—never been done before.”

Researchers used Difference-in-Differences (DiD) models to establish the relationship between happiness and the two different types of shocks. Additionally, they used the DiD models to determine the magnitude of the shocks on happiness. Furthermore, they estimated an event study model to test for any adaptation of happiness levels after the macro-level shocks.

“From our DiD models, we determined a strong negative relationship between happiness and both types of macro-level shocks,” Rossouw told us. “Our DiD results also revealed that the lockdown had a bigger effect on happiness than the invasion of Ukraine. The magnitude results makes sense because, for the countries under investigation, the lockdown had a direct effect, whereas the invasion of Ukraine had an indirect effect. However, we were surprised to find from our event study that happiness levels adapted faster after the lockdown shock than after the invasion shock.”

“We were surprised that happiness levels adapted faster after the lockdown shock than after the invasion shock,” Rossouw told us. “We found that happiness levels were positive two weeks after the endogenous lockdown shock and significantly higher than in the week of the shock.”
For the invasion of Ukraine, the research team found that it took one week longer for happiness levels to adapt. They explain the longer period for happiness levels to adapt after the invasion of Ukraine in two ways: First, the countries in the study were negatively impacted because they expressed sadness and sympathy for the Ukrainian people's plight, second, as time passed, the countries were negatively impacted because of the economic spillover effects in the form of higher inflation, gas prices and so on.

“We know that people's happiness profoundly affects a country's economic outcomes, including productivity, future income, and labour market performance,” Rossouw told us. “Increased happiness also positively affects a nation's social and health sectors, fosters altruistic behaviour, and enhances various cognitive and social capabilities. Additionally, individuals with greater happiness levels are healthier, live longer, generally report higher levels of life satisfaction, are less inclined to engage in high-risk activities and take preventative action to mitigate risks.”
Given all these benefits of ensuring your population is happy, we should keep on taking advantage of Big Data and 4IR methodologies, said Rossouw, such as machine learning, to measure happiness in real time. In doing so, we can provide policymakers with timely information needed to implement corrective policies sooner rather than later.

“What about collective emotions?” Rossouw told us. “We know they are affected by macro-level shocks. Still, we do not know whether a similar or different sequence of collective emotions is observed in response to two different types of macro-level shocks. We also do not know the specific public perceptions and concerns that lead to observed emotional changes in response to macro-level shocks. Big Data and 4IR methodologies can also help us answer these interesting questions.”

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