Happiness and financial satisfaction in Israel: Effects of religiosity, ethnicity, and war
Introduction
Since some decades happiness1 has become a subject of research for economists. The basis of this literature is the happiness or life satisfaction question in which individuals are asked to report their satisfaction with life on a bounded scale. The question is:
“On the whole, how satisfied are you with the life you are leading?”
The answer to this question, which in Israel’s Social Survey ranges from 1 (very dissatisfied) to 4 (very satisfied), has been termed the individual’s life satisfaction or happiness. An alternative for this question is to ask respondents to evaluate their life on a numerical scale, e.g. between 1 and 7 or 0 and 10, instead of in verbal categories. Similar questions are posed with respect to specific aspects of life, or so-called life domains, like job satisfaction, satisfaction with respect to the respondent’s financial situation, housing conditions, etc.
The responses to these questions appear to be correlated with personal characteristics of the respondents, such as age, income, past events, and their social and physical environment. We refer for surveys on this fast expanding literature to Frey and Stutzer, 2002a, Frey and Stutzer, 2002b, Senik, 2005, Clark et al., 2008, Van Praag and Ferrer-i-Carbonell, 2004, Dolan et al., 2008. It is outside the scope of this article to give an in-depth review of the literature which is expanding at an exponential rate.
In this paper we are especially focusing on the simultaneous effects of religiosity, the impact of a war situation and the effect of the migrant status both on life satisfaction and on financial satisfaction. The latter concept comes close to the utility of income concept, while the former refers to life as whole, and may be seen as the wider concept of well-being or happiness. The effects will be different, and given the smaller and more homogeneous domain, the effects on financial satisfaction will be probably more pronounced than for life satisfaction.
The Israeli population is one of the few populations where the simultaneous effects of religiosity, the impact of a war situation and the effect of the migrant status can be observed and studied on the basis of reliable data sets. It has a mix of several religions, it lives under a war threat which is sometimes becoming reality, and a sizeable part of the population was not born in the country. Clearly there are many other countries living in comparable circumstances, but not under the fortunate circumstance that there is a steady statistical data collection, comparable to the elaborate statistical administrations in Western countries that live under more stable conditions.
In Israel the three monotheistic religions are co-existing side by side, first Judaism—the religion of the Jewish majority, and second and third Islam and Christianity—the religions of the Arab minority. There is a small minority of Druzes. Moreover, within the two sub-populations we find a wide spectrum of religiosity, from secular through traditional and orthodox to ultra-orthodox. A sizeable part of this colorful ethno-religious mosaic consists of immigrants from all corners of the world, who make up for roughly 30% of the Jewish population.
Within the Jewish population there are three major ethnic subgroups, viz., the Jews of Ashkenazi descent (coming from European and American countries), Sephardi Jews (coming from North-African and Middle-Eastern countries), and the immigrants from the former USSR. Some families are in Israel since time immemorial, most are second-generation, and others have just recently arrived. Finally, Israel is a country where people live under a continuous threat of terrorism and warfare.
Apart from looking at the usual happiness determinants we will look at some additional factors, viz., religiosity, immigration, ethnicity, and the effects of war. In the literature there are many studies on the impact of religiosity on happiness, but most of those studies are found in the psychological and sociological journals (see Cohen, 2002, Clark and Lelkes, 2005, Clark and Lelkes, 2009, Dehejia et al., 2007, Headey et al., 2010, Helliwell, 2003; Snoep, 2008). The main result of these studies is that religiously more active persons (mostly defined in terms of church attendance) tend to be happier. These results mostly refer to Christian religions, while our study focuses mainly on Islam and Judaism, two religions that can deeply impregnate the believer’s life style. Clearly, within the two religions we find a lot of gradations, ranging from ultra-orthodoxy to atheists all but in name, but it is obvious that especially for the more conservative members Islam and Judaism stand for a complex of lifestyles, ethics, and norms that deal with important issues such as one’s clothing, food, time usage, obligations with respect to the family, and procreation. In our data set we have information regarding the degree of religiosity in terms of being more secular, conservative, or ultra-orthodox.
Although it is mostly found that religious people are happier, Snoep (2008), for instance, finds evidence for the opposite. On the one hand, being religious and belonging to a religious group may provide a feeling of protection and safety for the individual. The religious individual mostly has a comprehensive vision of purpose in life, and a sense of security derived from belonging to a community, etc. On the other hand, the fact that during the 20th century the population share of religiously active citizens sharply declined in Western countries, seems to imply that many people do not see adherence to a religion as an ultimate means of achieving happiness. This observation would suggest a negative correlation between religiosity and life satisfaction. The direction of the causality is unclear as well.
A specific issue is the role of children and family. Is their significance different for religious people than for non-religious people? Given the significance of having offspring preached by both orthodox Judaism and Islam, we expect that having children has a more positive impact on the well-being of believers than on that of non-believers. We will see that for the Jewish population this is indeed the case. The impact of having children on financial satisfaction may be considered likewise. It is well-known that having children has a negative effect on financial satisfaction, which is easily explained by the additional cost of children (see e.g. Van Praag & Warnaar, 1993, chap. 6). If having children is positively evaluated by religious persons, we may ask whether this also will be reflected in the impact of children on their financial satisfaction.
With respect to the impact of a war situation we would expect that individual life satisfaction will depend on the personal risk if one is living in a zone of warfare, on the national mood before and during the war, and, ultimately, on the war outcome. Moreover, it is plausible to expect differences in the effect of this war on life – satisfaction between Jews and Arabs.
One of the few papers on migration and happiness in the happiness economics literature is the paper by Easterlin and Plagnol (2008), which deals with the specific case of the re-unification of Germany, which is however hardly representative for migration between two different cultures. On one hand we expect that immigrants will be happy, as they compare their present situation with the past situation in their homeland. On the other hand we expect they are less happy than their new compatriots, as they struggle with adaptation problems of all sorts. The relationship between migration and mental health, which is sometimes analyzed as the reverse of happiness, has been studied as well. Most of the literature concludes that migration has a negative impact on important mental health problems, although the relation is uncertain when a broader range of mental health (e.g. depression) is included. In a recent study Stillman, McKenzie, and Gibson (2009) for the first time estimate the causal effect of migration on mental health by using information on a lottery system that randomly chooses from all the applicants the ones that are allowed to migrate from Tonga to New Zeeland. These authors use a measure of mental health that strongly relates to psychological well-being and thus to happiness. They conclude that migration to New Zealand improves the mental health of Tongan immigrants and that the effect is larger for women and for those with lower levels of mental health before migration.
In this study we differentiate between first- and second-generation immigrants. We differentiate with respect to origin as well. Moreover, we use for first-generation immigrants information on when they entered the country. We control for fluency in Hebrew that has been shown (e.g. Berman et al., 2003, Chiswick, 1998) to be instrumental for a successful integration into the Israeli labor market.
The effect of terrorism on happiness has been studied by Frey et al., 2007, Frey et al., 2009, Romanov et al., in press. Frey et al. (2009) use the life satisfaction approach to assess the costs of terrorism in France, the United Kingdom, and the Republic of Ireland; Frey et al. (2007) analyze the Northern Ireland case, while Romanov et al. (in press) study the effect of the ‘intifada’ (that took place in 2001–2004) on happiness of Israelis. Evidently, there are all kinds of terrorism. During the period studied by us (year 2006) there was one major event, the Second Lebanon war, which was particularly threatening for the northern region of the country. The difference between the ‘intifada’ and the Lebanon war is that in the first instance the trouble was caused by sporadic terror attacks carried out by Palestinians across Israel over the period of 4 years, while in the case of the Lebanon war it was a cross-border clash between the state of Israel and a rather well-organized foreign Hezbollah army that bombarded Northern Israel intensively during 34 days. In our empirical analysis we focus on the possible effect of the Lebanon war and ignore other minor incidents. Since the interviews have been dated per day, we can follow the immediate impact of such a short war and its evolution over time. However, as the chances of the war vary from day to day the war effect on happiness varies also from day to day. It is not monotonic with the number of days elapsed. Ideally, we should have as explanatory variable a daily ‘war success’ or, adversely, ‘war damage’ index, which we do not have at our disposal. In this paper, and following up on Romanov et al. (in press), we study the impact of the Lebanon war on satisfaction with ‘life as a whole’ and on financial satisfaction, i.e. satisfaction with one’s economic situation in Israel.
Section snippets
Empirical strategy
There are various ways to estimate the effects we look for. The usual way in order to disentangle the various effects is to use Ordered Probit or OLS. Let the response categories to the satisfaction question be denoted by j = 1, … , J and let the explanatory variables be denoted by the vector . The response by individual n is denoted by . Then the model may be written aswhere stands for the satisfaction value assigned to category jn and where ε is the usual
Description of the data
Our research is based on Israel’s annual Social Survey for the year 2006, which is administered by Israel’s Central Bureau of Statistics. The survey population is defined as the permanent non-institutional population of citizens, aged 20 and older, including residents of non-custodial institutions (such as student dormitories, immigrant centers and independent living projects for the elderly). New immigrants are a part of the survey population if they have been present in Israel for at least 6
Results
As stated before, we consider two dependent variables, viz., life satisfaction and satisfaction with one’s financial situation. The estimates for life satisfaction and financial satisfaction are presented in Table 4a, Table 4b for Jews and Arabs, respectively.
When comparing the tables we should keep in mind that the net size of the Arab sub-sample is about 1100, while the Jewish sub-sample consists of about 5100 respondents. It implies that we may expect that the ‘Arab’ standard deviations will
Discussion and conclusion
In this paper we analyzed happiness in Israel. As such it is the second study, after Romanov et al. (in press) who focused mostly on the effect of terror attacks during the 3 years of Intifada (2002–2004), on life satisfaction of Israelis. Partly, it replicates the now more or less traditional results, well-known from the exponentially expanding literature in happiness economics. However, there are some new features in the data set that we exploited. First, we used the fact that the Israeli
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