Perez Truglia, Ricardo Nicolas and Bottan, Nicolas Luis (2008): Deconstructing the Hedonic Treadmill: Is Happiness Autoregressive?
This is the latest version of this item.
Download (1MB) | Preview
Affective habituation is well-documented in social sciences: people seem to adapt to many life events, ranging from lottery windfalls to terminal illnesses. We propose a subtle but critical difference: current happiness may depend directly on past happiness. We test our hypothesis running dynamic happiness regressions using panel data from the German Socio-Economic Panel Study, the British Household Panel Survey and the Swiss Household Panel. Contrary to the widespread prior among economists and non-economists, the coefficient on lagged happiness is positive and statistically significant. We discuss some explanations for the puzzle. Our favorite is that reported happiness is time-inconsistent, even within individuals. We test this conjecture by using a 52-days study. As expected, the coefficient on lagged happiness is negative and statistically significant. We find that changes in hedonic states bounce back 30% in only 5 days.
|Item Type:||MPRA Paper|
|Original Title:||Deconstructing the Hedonic Treadmill: Is Happiness Autoregressive?|
|Keywords:||happiness, autoregressive, adaptation, dynamic panel|
|Subjects:||I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I31 - General Welfare, Well-Being
C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models
I - Health, Education, and Welfare > I0 - General > I00 - General
|Depositing User:||Ricardo Perez Truglia|
|Date Deposited:||01. Feb 2010 00:30|
|Last Modified:||21. Apr 2015 23:01|
Angrist, Joshua D. and Pischke, Jörn-Steffen (2008), “Mostly Harmless Econometrics: An Empiricist's Companion.” NJ: Princeton University Press.
Anderson, T. W. and Hsiao, C. (1981), “Estimation of Dynamic Models With Error Components,” Journal of the American Statistical Association, Vol. 76(375), pp. 598-606.
Arellano, M. and Bond, S. (1991), “Some Test of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,” The Review of Economic Studies, Vol. 58 (2), pp. 277-297.
Arellano, M. and Bover, O. (1995), “Another look at the instrumental variable estimation of error-component models,” Journal of Econometrics, Vol. 68, pp. 29-51.
Baron, J.; Asch, D.A.; Fagerlin, A.; Jepson, C.; Loewenstein, G.; Riis, J. (2003), “Effect of assessment method on the discrepancy between judgments of health disorders people have and do not have: A web study,” Medical Decision Making, Vol. 23, pp. 422-434.
Becchetti, L. and Castriota, S. (2007), “Does Money Affect Happiness and Self-esteem? The poor borrowers’ perspective in a natural experiment,” Tor Vergata University, CEIS Departmental Working Paper, No. 259.
Bertrand, Marianne and Mullainathan, Sendhil (2001), “Do People Mean What They Say? Implications for Subjective Survey Data,” American Economic Review, Vol. 91 (2), pp. 67-73.
Bonke, Jens and Browning, Martin (2003), “The distribution of well-being and income within the Household,” AM Working Paper 2003-01, University of Copenhagen.
Brickman P. and Campbell, D. T. (1971), “Hedonic Relativism and Planning the Good Society,” in Appley, M. H. “Adaptation-level theory.” New York: Academic Press.
Budowski, M.; Tillman, R.; Zimmermann, E.; Wernli, B.; Scherpenzeel, A. and Gabadinho, A. (2001), “The Swiss Household Panel 1999-2003: Data for research on micro-social change,” ZUMA-Nachrichten 49 (25), pp. 100-125.
Caplin, A. and Leahy, J. (2001), “Psychological Expected Utility Theory and Anticipatory Feelings,” The Quarterly Journal of Economics, Vol. 116 (1), pp. 55-79.
Charness, G. and Grosskopf, B. (2001), “Relative Payoffs and Happiness: An Experimental Study,” Journal of Economic Behavior & Organization, Vol. 45 (3), pp. 301-328.
Clark, A. E.; Diener, E.; Georgellis, Y. and Lucas, R. (2008), “Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis,” The Economic Journal, Vol. 118(529), pp. F222-F243.
Cruces, G.; Perez Truglia, R.N. and Tetaz, M. (2009) “Biased self-perceptions of income rankings and attitudes towards redistribution,” Working Paper, CEDLAS.
Di Tella, R.; Haisken-De New, J. and MacCulloch, R. (2007), “Happiness Adaptation to Income and to Status in an Individual Panel,” NBER Working Paper No. W13159.
Diener, E., Lucas, R. and Scollon, C.N. (2006), “Beyond the Hedonic Treadmill: Revising the Adaptation Theory of Well-Being,” American Psychologist, Vol. 61(4), pp. 305-314.
Easterlin, R.A. (2003), “Explaining Happiness” PNAS, Vol. 100 (19), pp. 11176-11183.
Ekman, P.; Davidson, R. and Friesen, W. (1990), “The Duchenne Smile: Emotional Expression and Brain Physiology II,” Journal of Personality and Social Psychology, Vol. 58, pp. 342-53.
Ferrer-i-Carbonell, A. and Frijters, P. (2004), “How Important is Methodology for the Estimates of the Determinants of Happiness?” The Economic Journal, Vol. 114 (497), pp. 641-659.
Ferrer-i-Carbonell, A. (2005), “Income and Wellbeing: an empirical analysis of the comparison income effect,” Journal of Public Economics, Vol. 89 (5-6), pp. 997-1019.
Frederick, Shane, and Loewenstein, George (1999), “Hedonic Adaptation,” in Daniel Kahneman, Edward Diener, and Norbert Schwarz, eds., “Well-being: The foundations of hedonic psychology.” New York: Russell Sage Foundation Press.
Freud, A. (1937), “The Ego and the Mechanisms of Defence.” London: Hogarth Press and Institute of Psycho-Analysis.
Gilbert, D.T.; Pinel, E. C.; Wilson, T.D.; Blumberg, S.J. and Wheatley, T.P. (1998), “Immune Neglect: a source of durability bias in affective forecasting,” Journal of Personality and Social Psychology, Vol. 75, pp. 617-638.
Hagerty, Michael R. (2003), “Was Life Better in the ‘Good Old Days’? Intertemporal Judgments of Life Satisfaction,” Journal of Happiness Studies, Vol. 4 (2), pp. 115-139.
Haybron, Daniel (2008), “The Pursuit of Unhappiness: The Elusive Psychology of Well-Being.” Oxford: Oxford University Press.
Headey, Bruce; Muffels, Ruud and Wooden, Mark (2004), “Money Doesn’t Buy Happiness… Or Does It? A Reconsideration Based on the Combined Effects of Wealth, Income and Consumption,” IZA Discussion Paper No. 1218.
Helson, H. (1964), “Adaptation-level theory.” New York: Harper & Row. Jones, K.; Shainberg, L. and Byer, C. (1979), “Drugs and Alcohol.” New York: Harper & Row.
Judson, R. A. and Owen, A. L. (1996) “Estimating Dynamic Panel Data Models: A Practical Guide for Macroeconomists”. Federal Reserve Board of Governors.
Kahneman D. and Snell, J. (1992), “Predicting a Changing Taste: Do People Know What They Like?” Journal of Behavioral Decision Making, Vol. 5 (3), pp. 187-200.
Kahneman D. (2000), “Experienced Utility and Objective Happiness: A Moment-Based Approach,” Ch. 37 in Kahneman D. and Tversky A. (Eds.) “Choices, Values and Frames.” New York: Cambridge University Press and the Russell Sage Foundation.
Kleibergen, F., and Paap, R. (2006), “Generalized reduced rank tests using the singular value decomposition,” Journal of Econometrics, Vol. 127 (1), pp. 97–126.
Loewenstein, George and Ubel, Peter A. (2008), “Hedonic adaptation and the role of decision and experience utility in public policy,“ Journal of Public Economics, Volume 92 (8-9), pp. 1795-1810.
Lucas, R., Clark, A., Georgellis, Y. and Diener, E. (2003), “Reexamining Adaptation and the Set Point Model of Happiness: Reactions to Changes in Marital Status”. Journal of Personality and Social Psychology, Vol. 84(3), pp. 527-539.
Lyubomirsky, S.; King, L. and Diener, E. (2005), “The Benefits of Frequent Positive Affect: Does Happiness Lead to Success?” Psychological Bulletin, Vol. 131 (6), pp. 803-855.
McBride, M. (2007), “Money, Happiness, and Aspirations: An Experimental Study,” Working Paper No. 060721.
Oishi, S.; Schimmack, U. and Diener, E. (2001), “Pleasures and subjective wellbeing,” European Journal of Personality, Vol. 15, pp. 153-167.
Oswald, A. J. and Powdthavee, N. (2006), “Does Happiness Adapt? A Longitudinal Study of disability with Implications for Economists and Judges,” IZA Discussion Paper No. 2208.
Patterson D.R.; Everett, J.J.; Bombardier, C.H.; Questad, K.A.; Lee, V.K. and Marvin J.A. (1993), “Psychological effects of severe burn injuries,” Psychological Bulletin, No. 113 (2), pp. 362-78.
Pavot, W.; Diener, E.; Colvin, C. R. and Sandvik, E. (1991), “Further Validation of the Satisfaction With Life Scale: Evidence for the Cross-Method Convergence of Well-Being Measures,” Journal of Personality Assessment, Vol. 57 (1), pp. 149-161.
Perez Truglia, R. N. (2009), “On the genesis of hedonic adaptation,” Working Paper, Harvard University.
Rayo, L. and Becker, G. (2005), “Evolutionary Efficiency and Happiness,” Journal of Political Economy, Vol. 115 (2), pp. 302-337.
Riis, J.; Loewenstein, G.; Baron, J.; Jepson, C.; Fagerlin, A. and Ubel, P.A. (2005), “Ignorance of Hedonic Adaptation to Hemodialysis: A Study Using Ecological Momentary Assessment,” Journal of Experimental Psychology General, Vol. 134 (1), pp. 3-9.
Schkade, D.A. and Kahneman, D. (1998), “Does Living in California Make People Happy? A Focusing Illusion in Judgments of Life Satisfaction,” Psychological Science, Vol. 9 (5), pp. 340-346.
Schultz, W.; Dayan, P. and Montague, P.R. (1997), “A neural substrate of prediction and reward,” Science, Vol. 275, pp. 1593-1599.
Schwarz, N. (1999), “Self-reports: How the questions shape the answers,” American Psychologist, Vol. 54 (2), pp. 93-105.
Schwarz, Norbert (1987), “Stimmung als Information: Untersuchungen zum Einfluss von Stimmungen auf die Bewertung des eigenen Lebens,” Heidelberg: Springer Verlag.
Schwarze, J. (2003), “Using Panel Data on Income Satisfaction to Estimate Equivalence Scale Elasticity,” Review of Income and Wealth, Vol. 49 (3), pp. 359-372.
Sheldon, K.M. and King, L. (2001), “Why positive psychology is necessary,” American Psychologist, Vol. 56 (3), pp. 216-217.
Smith, Dylan M.; Sherriff, Ryan L.; Damschroder, Laura; Loewenstein, George; Ubel, Peter A. (2006), “Misremembering colostomies? Former patients give lower utility ratings than do current patients,” Health Psychology, Vol. 25 (6), pp. 688-695.
Stevens, S. (1958), “Adaptation-level versus the relativity of judgment,” American Journal of Psychology,Vol. 71 (4), pp. 633-646.
Taylor, Marcia; Brice, John; Buck, Nick and Prentice-Lane, Elaine (2006), “British Household Panel Survey User Manual Volume A: Introduction, Technical Report and Appendices.” Colchester: University of Essex.
Tyc VL. Psychosocial adaptation of children and adolescents with limb deficiencies. Clin Psychol Rev 12:275-291, 1992.
University of Essex. Institute for Social and Economic Research, British Household Panel Survey: Waves 1-15, 1991-2006 [computer file]. 3rd Edition. Colchester, Essex: UK Data Archive [distributor], June 2007. SN: 5151.
Wagner G.; Frick, J. R. and Schupp J. (2007), “The German Socio-Economic Panel Study (SOEP) – Scope, Evolution and Enhancements”. Schmollers Jahrbuch (Journal of Applied Social Science Studies), Vol. 127(1), pp. 139-169.
Whaples, Robert (2009), “The Policy Views of American Economic Association Members: The Results of a New Survey,” Econ Journal Watch, Vol. 6 (3), pp. 337-348.
Wilkinson, Will (2007), “In Pursuit of Happiness Research: Is it Reliable? What Does it Imply for Policy?” Cato Institute Policy Analysis Series, No. 590.
Wilson, T. D.; Meyers, J. and Gilbert, D. T. (2003), “How Happy Was I, Anyway? A Retrospective Impact Bias,” Social Cognition, Vol. 21 (6), pp. 421-446.
Wilson, T.D. and Gilbert, D.T. (2005), “A model of affective adaptation,” Working paper, University of Virginia and Harvard University.
Available Versions of this Item
Deconstructing the Hedonic Treadmill. (deposited 26. Nov 2008 03:07)
- Deconstructing the Hedonic Treadmill: Is Happiness Autoregressive? (deposited 01. Feb 2010 00:30) [Currently Displayed]