Economic Consequences of Mispredicting Utility

Frey, Bruno S. and Stutzer, Alois. (2014) Economic Consequences of Mispredicting Utility. Journal of Happiness Studies, 15 (4). pp. 937-956.

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Official URL: http://edoc.unibas.ch/39282/

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In a simple conceptual framework, we organize a multitude of phenomena related to the (mis)prediction of utility. Consequences in terms of distorted choices and lower well-being emerge if people have to trade-off between alternatives that are characterized by attributes satisfying extrinsic desires and alternatives serving intrinsic needs. Thereby the neglect of asymmetries in adaptation is proposed as an important driver. The theoretical analysis is consistent with econometric evidence on commuting choice using data on subjective well-being. People show substantial adaptation to a higher labor income but not to commuting. This may account for the finding that people are not compensated for the burden of commuting.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Politische ├ľkonomie (Stutzer)
UniBasel Contributors:Stutzer, Alois
Item Type:Article, refereed
Article Subtype:Research Article
Note:Publication type according to Uni Basel Research Database: Journal article -- The final publication is available at Springer, see DOI link.
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Last Modified:22 Sep 2016 10:14
Deposited On:22 Sep 2016 09:51

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