Are Not Any Silver Linings in the Cloud? Subjective Well-being Among Deprived Young People

This paper analyzes the channels of change of subjective well-being (SWB), and how are the effects of a social intermediation program. We develop a simple theoretical model to link SWB with the individual and reference wealth, the effort and the level of aspirations. After to overcome selection issues with an instrumental variable to identify causal effects, we find a negative impact on SWB being the main channel of this change is subjective relative wealth, i.e., the relation between the individual and the reference wealth. There is no effect through other theoretical channels, but the results on SWB are heterogeneous by psychological features; they are higher among those with low aspiration levels and external locus of control. Finally, we disentangle the main program characteristics that might generate this effect giving relevant information for the policymakers.