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Economic approaches to understanding change in happiness

Stutzer, Alois and Powdthavee, Nattavudh. (2014) Economic approaches to understanding change in happiness. IZA Discussion Paper, (8131).

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Abstract

Are people condemned to an inherent level of experienced happiness? A review of the economic research on subjective well-being gives reason to the assessment that happiness can change. First, empirical findings clearly indicate that people are not indifferent to adverse living conditions when reporting their subjective well-being as observed for limited freedom of choice, low levels of democratization, unemployment, low income, etc. Second, considering people's adaptation to life events and (external) conditions reveals substantial heterogeneity in the speed as well as the degree of reversion. Together, the evidence suggests that reported subjective well-being is a valuable complementary source of information about human well-being and the phenomenon of adaptation. Many challenges, of course, remain. First, we are only at the beginning of understanding variation in the process of adaptation. The modeling of happiness over the life course promises a productive perspective. Second, adaptation might well pose a challenge to individual decision-making when people are not good in predicting it. Third, adaptation might have great consequences for public policy and the idea of social welfare maximization depending on how fast and slow adapting people are treated.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Politische ├ľkonomie (Stutzer)
UniBasel Contributors:Stutzer, Alois
Item Type:Working Paper
Publisher:Forschungsinstitut zur Zukunft der Arbeit
Number of Pages:26
Note:Publication type according to Uni Basel Research Database: Discussion paper / Internet publication
Language:English
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Last Modified:22 Sep 2016 09:12
Deposited On:22 Sep 2016 09:07

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