From Happiness Data to Behavioral Economics
Paper Session
Friday, Jan. 3, 2025 8:00 AM - 10:00 AM (PST)
- Chair: Kristen Cooper, University of California-Los Angeles and Gordon College
Welfare and the Act of Choosing
Abstract
The standard revealed-preference approach to welfare economics encounters fundamental difficulties when the act of choosing directly affects welfare through emotions such as guilt, pride, and anxiety. We address this problem by developing an approach that redefines consumption bundles in terms of the sensations they produce, and measures welfare by blending choice-based methods with self-reported well-being techniques. In applications to classic social preferences paradigms, our approach shows that standard revealed-preference methods, including those that exploit choices over menus, mismeasure welfare because preferences depend on choice sets, while self-reported happiness and satisfaction are not sufficient statistics for welfare.What Do People Want?
Abstract
What aspects of well-being are most important in people’s lives? We elicited over a million stated preference choices about 220 dimensions or “aspects” of well-being, from a sample of about 2,500 respondents who completed surveys on Amazon’s Mechanical Turk (MTurk). Our surveys also include self-reported well-being (SWB) questions about respondents’ current levels of the aspects of well-being. From the stated preference data, we estimate the aspects’ relative log marginal utilities in standard deviation units. We econometrically estimate and correct for interpersonal differences in scale use tendencies, so that the units are interpersonally comparable. We find that respondents put the highest marginal utilities on family well-being, the ability to support one’s family financially, and mental and physical health. We find substantial heterogeneity, with current SWB levels explaining a substantial amount of the overall variation across respondents in marginal utilities.Observed Choice versus Stated Satisfaction: Evidence from a Social Preferences Experiment
Abstract
In this study we contribute to the growing economic literature on the extent to which subjective well-being aligns with observed choices in the context of a straightforward social preference experiment. This is important as prior research has shown that while choice and predicted subjective well-being often align, individuals do not exclusively maximize subjective well-being. Further, it has been shown that reported subjective well-being can be influenced by question order as well as other factors. We test whether these results hold in a straightforward experimental setting. Moreover, we test a novel question: whether observed choice is influenced by stated satisfaction. To do so, we develop an online experiment building on Diaz et al. (2023) and examine whether stated satisfaction aligns with observed choice, and vice versa. Specifically, participants encounter various payment-profiles; in each profile, the participant’s payment is held constant while the payment of an anonymous, randomly-assigned other experimental participant varies. There are two main tasks. In one, participants choose their preferred payment-profile; in the other, participants state their satisfaction with each payment-profile. To test for order effects, we vary the order in which participants complete the two main tasks.Discussant(s)
Kristen Cooper
,
University of California-Los Angeles and Gordon College
Daniel J. Benjamin
,
University of California-Los Angeles
Dmitry Taubinsky
,
University of California-Berkeley
Collin B. Raymond
,
Cornell University
JEL Classifications
- D9 - Micro-Based Behavioral Economics