Carol Graham

Carol Graham is Professor in the School of Public Policy at the University of Maryland, and Senior Fellow in Economic Studies at the Brookings Institution, where she also co-directs the Center on Social and Economic Dynamics. From 2002–2004, she served as a Vice President at Brookings. She has also served as Special Advisor to the Vice President of the Inter-American Development Bank, as a Visiting Fellow in the Office of the Chief Economist of the World Bank, and as a consultant to the International Monetary Fund and the Harvard Institute for International Development. She is the author of numerous books and articles on market reform, poverty, inequality, and novel welfare metrics. Her most recent book, published by Brookings and co-authored with Stefano Pettinato, is Happiness and Hardship: Opportunity and Insecurity in New Market Economies. She has published articles in a range of journals including the Journal of Economic Behavior and Organization; the World Bank Research Observer; the Journal of Socio-Economics; the Journal of Development Studies; the Journal of Happiness Studies; the Journal of Latin American Studies; World Economics; the Journal of Human Development; and Foreign Affairs. She has an A.B. from Princeton University, an M.A. from Johns Hopkins, and a D.Phil from Oxford University. She and her husband have three children.

Papers Published in World Economics:

Well-being and Public Attitudes in Afghanistan

Afghanistan is a context where individuals have to cope with the most adverse of circumstances. Our study of happiness finds that Afghans conform to a remarkably consistent worldwide pattern in the determinants of happiness across individuals within countries of all different development levels. Average happiness scores in Afghanistan, meanwhile, are higher than the world average and on a par with those from Latin America. In contrast, scores on a ‘best possible life’ question are much lower. This suggests that Afghans may be naturally cheerful and/or have adapted their expectations downward in the face of adversity, yet are more realistic when thinking about their situation in relative terms. Also suggestive of adaptation is that Afghans in general do not report to be unhappy when victims of crime and corruption, most likely because these phenomena have become the norm. In contrast, respondents in some Taliban-influenced regions, where crime and corruption are less common, do report unhappiness with corruption victimisation. More generally, resilient preferences for political freedom coexist with tolerance of crime and corruption and low levels of trust in public institutions.

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Book Review

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The Economics of Happiness
Author: Carol Graham

The economics of happiness is an approach to assessing welfare that combines economists’ techniques with those of psychologists, and relies on more expansive notions of utility than does conventional economics. Research based on this approach highlights the factors—in addition to income—that affect well-being. It is well suited to informing questions in areas where revealed preferences provide limited information, such as the welfare effects of inequality and of macroeconomic policies such as inflation and unemployment. One such question is the gap between economists’ assessments of the aggregate benefits of the globalization process and the more pessimistic assessments that are typical of the general public. The paper summarizes research on some of these questions, and in particular on those relevant to globalization, poverty, and inequality.

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Hardship and Happiness

This paper focuses on an age-old puzzle: why some societies peacefully tolerate high levels of inequality and others do not. The authors posit that opportunity and mobility over time are as important as current distributions are to the explanation. Assessments of past mobility and future expectations are as important as objective trends. An analyze of data for Latin America compares subjective assessments with objective trends during a period of volatility and policy change. 
It was found that relative incomes matter as much as absolute ones. Expectations of future upward mobility were higher in countries with more inequality. Upwardly mobile people were more critical in their self assessments than were less mobile people. Collective memory of macroeconomic volatility was critical to subjective assessments of future prospects: those countries with recent crises and reforms had the highest levels of support for market policies. The effects of expectations on self-assessments have methodological and analytical implications for political economy research.

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