Graham and MacLennan (2020) on Well-Being

Carol Graham and Sara MacLennan, “Policy Insights from the New Science of Well-Being.” Behavioral Science & Policy 6(1): 1–20, 2020; available for download here. 

• Advice for job-seekers! Inquire about autonomy, meaningful work, and a respectful atmosphere -- these will affect your well-being at work. 

• Economic growth can be accompanied by declining happiness (or declining subjective well-being (SWB)). 

• Three types of happiness measures: (1) Hedonic (or affective, or experienced); (2) Evaluative (life satisfaction); (3) Eudaimonic (meaning and purpose). These measures are far from perfectly correlated; people seem to think that evaluative measures (overall life satisfaction) are most important. 

• Four common findings: (1) Relative position matters; (2) Reference points matter; (3) Adaptation occurs, for both favorable and unfavorable events; and, (4) People can mispredict how their choices will affect their happiness, and actual choices might not reveal preferences (as measured by SWB). 

• Some additional common findings include: (4) Income is positively connected with happiness; (5) Income increases are subject to hedonic adaptation; and (6) With respect to age, happiness appears to be u-shaped. 

• SWB provides indirect evidence on the value of activities or possessions. 

• For instance, we don’t need to ask, how happy does smoking make you; nor do we just infer from your heavy smoking that it greatly contributes to your well-being. Rather, we can ask you in general how happy you are, and then learn about your activities, and see (across large numbers of people) if smoking is associated with increased happiness. 

• Maybe policy should aim to help the least happy people? 

• People in objectively poor circumstances might still have a lot of hedonic happiness – have they adapted, or lowered their expectations? 

• Beware of making happiness an official policy goal!? -- people will distrust the government's motives as well as the reliability of the data. 

• Much of your happiness is inherited. 

• Noise and commuting are hard to adapt to. 

• In health studies, SWB can be a supplement to QALYs. 

• Mental health becomes a priority when SWB is emphasized.

Hoang and Knabe (2019) on Unemployment and Happiness

Thi Truong An Hoang and Andreas Knabe, “Time Use, Unemployment, and Well-being: an Empirical Analysis Using British Time-use Data.” CESifo Working Paper No. 7581, March 2019.

• Unemployment seems to lower subjective well-being (SWB) when measured as life satisfaction – but most people find the hours spent at their jobs not to be very happy.

• Perhaps the unemployed have better days, on average, than the employed, because the unemployed can shift time away from working and commuting – that is, the unemployed might win at SWB measured as (duration-weighted) affect, while losing in the life satisfaction measure of SWB.

• If an employed person and an unemployed person are both engaged in a leisure activity like listening to music, say, the employed person is likely to receive more satisfaction from it; this reflects the "saddening effect" of unemployment, where holding activities constant, the unemployed receive less pleasure from the activities than do the employed. 

• But the unemployed are able to engage in relatively pleasurable activities more frequently than the employed: this is the "time-composition effect" of unemployment.

• In the authors' British time-use data, the employed hold the edge in life satisfaction and in "life being worthwhile" measures of SWB; work itself seems meaningful, but not particularly enjoyable.

• The unemployed sleep more, and watch tv more. They also spend more time looking for a job, and that is an activity that people do not enjoy.

• Despite the saddening effect of unemployment – when engaging in the same activity, the employed capture more happiness than do the unemployed – the unemployed capture more happiness (affect) in a typical day than do the employed, thanks to the time-composition effect. Working really is not all that happiness-inducing.

• People enjoy weekends more than weekdays, and the weekend bonus is greater for the employed.

• Incidentally, there's some US data that shows significant differences in time use between prime-age men who are not in the labor force versus the unemployed.

• All this work on posting this outline is making me sad.

Frey and Stutzer (2014) on Mispredicting Utility

Bruno S. Frey and Alois Stutzer. “Economic Consequences of Mispredicting Utility.” Journal of Happiness Studies 15: 937–956, 2014 [pdf].

• People systematically mispredict the utility that they will receive from their consumption choices: intrinsic needs (competence, autonomy, and so on) are undervalued, while extrinsic rewards (money, status) are overvalued. 

• Utility mispredictions stem from mistakes concerning hedonic adaptation. Goods that satisfy internal needs are not as subject to adaptation as goods satisfying external rewards. People adapt to higher incomes, but not to commuting – indeed, they become slightly sensitized to the pains of commuting. 

• Frey and Stutzer model misprediction as arising from a change in the salience of an attribute between the ex ante choice to consume a good and the ex post consumption. Extrinsic attributes (salary, say) tend to be more salient than intrinsic features (time with friends) at the time of decision making. 

• Perhaps people adapt less to intrinsic characteristics because they get a reminder with each repetition, they are gifts that keep giving: each additional meeting with a friend brings new joy. 

• People do not adapt all that well to chronic health problems, unemployment, or the death of close relatives. Income increases are adapted to (but only 60% of the hedonic boost is lost). 

• Forecasts of utility are based on memories of past experiences, so the most memorable parts of an experience dominate. This leads to the peak-end rule, where the utility that lives in memory is roughly approximated by the average of the best moment and the quality of the ending. Intrinsic elements often involve duration, which is undercounted in memory. 

• Learning about mispredictions is surprisingly limited. 

• People like to provide a rational accounting for their actions; further, it is easier to explain to oneself and others the advantages of extrinsic dimensions than of intrinsic ones. 

• Markets tend to make prices and related attributes more focal. 

• Commuting time is a negative intrinsic dimension that receives short shrift in decision making. Lower rents and higher income do not, in practice, fully compensate for the pains of commuting, nor do other family members seem to gain from your long commute. Though a long commutes hurts life satisfaction, unemployment is much worse.