The Wall Street Journal reports –“Unemployment Hurts Happiness More Than Modest Inflation, New Paper Says”:
Unemployment is much more damaging to society than moderate levels of inflation, making central bankers’ disproportionate focus on the level of consumer price growth misguided, a former Bank of England rate-setter now at Dartmouth College writes in a new paper.
While “both higher unemployment and higher inflation lower well-being,” the authors write, “we also discover that unemployment depresses well-being more than inflation.”
In fact, Mr. Blanchflower argues, the pain suffered by joblessness is many times greater than that caused by higher inflation of similar proportions. “Our estimates with European data imply that a one percentage point increase in the unemployment rate lowers well-being by more than five times as much as one percentage point increase in the inflation.