Hedonic adaptation: The economics of subjective well

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Hedonic
Adaptation
Why we
don’t stay
happier
Hedonic adaptation
Changes in income or
experiences
temporarily affect
happiness, but as
people become
accustomed to the
new situation, the
impact diminishes
Hedonic adaptation in marriage
Daniel Kahneman (Princeton) and Alan B. Krueger (Princeton), 2006, Developments in the
measurement of subjective well-being. Journal of Economic Perspectives, 20(1), 3-24.
Hedonic adaptation to death of a spouse
Males
Females
A. Clark (Paris School of Economics), E. Diener (U. of Illinois) , Y. Georgellis (Brunel U.), R. Lucas
(Michigan State U.), 2008, Lags And Leads in Life Satisfaction: a Test of the Baseline Hypothesis.
The Economic Journal, 118, F222-F243
Hedonic adaptation in divorce
R. Lucas (Michigan State U.), 2005, Time Does Not Heal All Wounds: A Longitudinal Study of
Reaction and Adaptation to Divorce. Psychological Science, 16, 945-950
Hedonic adaptation in being fired
R. Di Tella (Harvard), J. Haisken-DeNew & R. MacCulloch (Imperial College London), 2007,
Happiness adaptation to income and to status in an individual panel. National Bureau of
Economic Research Working Paper, no. 13159.
Hedonic adaptation in disability
Paraplegic / quadriplegic injury victims
an average of 20 years after injury
tested on (1) Index of Psychological
Weil-Being, (2) Life Satisfaction
Index, and (3) Center for
Epidemiologic Studies Depression
Scale.
For all three outcome measures,
respondents reported levels of wellbeing only slightly lower than
population means of nondisabled
persons of similar age.
R. Schulz (U. Pittsburgh) & S. Decker (U. Portland), 1985, Long-term adjustment to physical
disability: the role of social support, perceived control, and self-blame. Journal of Personality
35%
30%
25%
20%
15%
10%
General
Population
Spinal Cord Injury
5%
0%
R. Schulz (U. Pittsburgh) & S. Decker (U. Portland), 1985, Long-term adjustment to physical
disability: the role of social support, perceived control, and self-blame. Journal of Personality
In a longitudinal study of a 215,000
person-years, for people who
become disabled, “we estimate the
degree of hedonic adaptation at –
depending on the severity of the
disability – approximately 30% to
50%”
Estimate may be
lower due to
progressive
diseases. Why?
A. Oswald (U. of Warwick, UK) & N. Powdthavee (U. of London, UK), 2008, Does happiness
adapt? A longitudinal study of disability with implications for economists and judges. Journal of
Adaptation takes time
“There is less evidence of
adaptation to chronic or
progressive diseases…in
contrast to paralysis
victims, whose condition is
likely to remain constant
over time, sufferers of such
debilitating diseases must
cope … with new
impairments as their
disease progresses”
S. Frederick (MIT) and G. Loewenstein (Carnegie Mellon), 1999, “Hedonic adaptation,” in Wellbeing: The foundations of hedonic psychology. D. Kahneman & E. Diener eds. NY, NY: Russell
Hedonic adaptation in wealth
Happiness
level of
lottery
winners
interviewed
a few
months
after
winning
was not
significantly
different
from nonwinners
Brickman, P., Coates, D., & Janoff-Bulman, R. (1978). Lottery winners and accident victims: Is
happiness relative? Journal of Personality and Social Psychology, 36(8), 917–927.
Greater past consumption leads to higher norms
causing satisfaction to return to previous levels.
The
hedonic
treadmill
Adaptation and relative standing may
prevent overall increases in income from
creating overall increases in satisfaction
Your Previous
Income
Your Happiness
at Income X
Your Comparison
Group Income
Economic research “show[s] that
happiness is indeed negatively related to
others’ incomes and to own past income.”
A. Clark (Paris School of Economics), P. Frijters (Queensland U.), & M. Shields (U. of Melbourne),
2008, Relative income, happiness, and utility: An explanation for the Easterlin paradox and other
puzzles. Journal of Economic Literature, 46, 95–144
Effect of a 50% spike in income
R. Di Tella (Harvard), J. Haisken-DeNew & R. MacCulloch (Imperial College London), 2007,
Happiness adaptation to income and to status in an individual panel. National Bureau of
Economic Research Working Paper, no. 13159.
Positive addictions
A way off the hedonic treadmill?
A positive addiction gradually
increases satisfaction from
consumption and may
generate future benefits.
This accumulated
experience resulting in
greater enjoyment is
called “consumption
capital”.
Daniel Mochon (MIT), Michael
Norton (Harvard), and Dan
Ariely (Duke) studied two
positive addictions that have
been most strongly associated
with subjective well-being:
exercise and religious
attendance.
D. Mochon (MIT), M. Norton (Harvard), D. Ariely (Duke), 2008, Getting off the hedonic treadmill, one step at
a time: The impact of regular religious practice and exercise on well-being. Journal of Economic Psychology,
29, 632-642.
Repetition stops hedonic adaptation
• Many studies have shown that few events in life
have a lasting impact on subjective well-being
because of people’s tendency to adapt quickly;
worse, those events that do have a lasting impact
tend to be negative.
• However, while major events may not provide
lasting increases in well-being, certain seemingly
minor events – such as attending religious
services or exercising – may do so by providing
small but frequent boosts: if people engage in
such behaviors with sufficient frequency, they
may cumulatively experience enough boosts to
attain higher well-being.
Repetition stops hedonic adaptation
• A survey of places of worship for 12 religions
found that people did receive positive boosts
for attending service, and that these boosts
were cumulative: the more they reported
attending, the happier they were.
Repetition stops hedonic adaptation
• Another study showed that people received
boosts for exercise and yoga, and that these
boosts too had a cumulative positive impact
on well-being.
Repetition stops hedonic adaptation
• These findings suggest that shifting focus from
the impact of major life changes on well-being
to the impact of seemingly minor repeated
behaviors is crucial for understanding how
best to improve well-being.
Immediate impact:
Well-being before and after exercise
Cumulative impact
Well-being and accumulated exercise
“for each unit of extra
time they had attended
their gym or yoga class
in the previous month,
participants
experienced an increase
in their well-being of
about a third of a
point.”
D. Mochon (MIT), M. Norton (Harvard), D. Ariely (Duke), 2008, Getting off the hedonic treadmill, one step at
a time: The impact of regular religious practice and exercise on well-being. Journal of Economic Psychology,
29, 632-642, p.640.
2,095 surveyed before and after religious service
(different people to prevent participants reporting
increased mood by remembering earlier response).
Religion
Baptist
Episcopalian
Congregational
Methodist
Christian
Catholic
Lutheran
Greek Orthodox
Unitarian
Mormon
Quaker
Baha'i
Places of worship
surveyed
8
5
3
3
6
4
2
1
1
1
2
1
People surveyed
499
438
263
208
161
120
109
99
60
57
42
39
D. Mochon (MIT), M. Norton (Harvard), D. Ariely (Duke), 2008, Getting off the hedonic treadmill, one step at
a time: The impact of regular religious practice and exercise on well-being. Journal of Economic Psychology,
29, 632-642, p.640.
Immediate impact:
Well being before and after attendance
Cumulative impact:
well-being and accumulated attendance
“Our findings imply that, in contrast
to the notion of an inescapable
hedonic treadmill, it is not pointless
for people to seek to improve their
well-being…, it seems like the key
for long lasting changes to
wellbeing is to engage in activities
that provide small and frequent
boosts, which in the long run will
lead to improved well-being, one
small step at a time.”
D. Mochon (MIT), M. Norton (Harvard), D. Ariely (Duke), 2008, Getting off the hedonic treadmill, one step at
a time: The impact of regular religious practice and exercise on well-being. Journal of Economic Psychology,
29, 632-642, p.640.
Policy implications
• These findings suggest that policies aimed at
improving welfare are not a pointless
endeavor, as the hedonic treadmill suggests.
• However, single-shot events such as a one
time tax refund will probably have little lasting
impact on the well-being of the country
• Policies that lead to small but repeated gains
are likely to succeed.
Hedonic adaptation and prospect theory
Sensitivity to the
perception of gains
or losses, rather
than the absolute
level of outcomes,
reflects the
importance of one’s
current state in
valuing outcomes.
Gains, losses,
and adaptation
The difference
between a 7-ft cell
and a 9-ft cell is
insignificant when
one has just lost
freedom, but very
important after
adapting to the
new level.
Utility
Prisoner after
adapting to
incarceration
New Hedonic
Norm: 7ft Cell
7 ft. Cell
New prisoner
Large difference
in utility after
adaptation
9 ft. Cell
Freedom
Original Hedonic
Norm: Freedom
Small difference in utility
between two large losses
S. Frederick (MIT) and G. Loewenstein (Carnegie Mellon), 1999, “Hedonic
adaptation,” in Well-being: The foundations of hedonic psychology. D.
Kahneman & E. Diener eds. NY, NY: Russell Sage Foundation, pp. 302-29.
Summary
Changes in income or experiences
temporarily affect happiness, but as
people become accustomed to the new
situation, the impact diminishes.
However, hedonic adaptation takes time
and may not offset ongoing improvements
(e.g., positive addictions) or declines (e.g.,
progressive diseases)
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