Working Paper: NBER ID: w16489
Authors: Daniel J. Benjamin; Ori Heffetz; Miles S. Kimball; Alex Rees-Jones
Abstract: Are subjective well-being (SWB) measures a good empirical proxy for utility? We evaluate one necessary assumption: that people's preferences coincide with what they predict will maximize their SWB. Our method is to present survey respondents with hypothetical scenarios and elicit both choice and predicted SWB rankings of two alternatives. While choice and predicted SWB rankings usually coincide, we find systematic reversals. Furthermore, we identify factors--such as predicted sense of purpose, control over one's life, family happiness, and social status--that help explain choice controlling for predicted SWB. We explore how our findings vary with the SWB measure and the choice situation.
Keywords: subjective well-being; utility; preferences; decision-making; survey research
JEL Codes: D03; D60
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| predicted SWB (I31) | actual choices (D01) |
| sense of purpose (I31) | choices (Y60) |
| control over one's life (D10) | choices (Y60) |
| family happiness (J12) | choices (Y60) |
| financial considerations (G50) | choices (Y60) |
| predicted SWB (I31) | discrepancies in choices (D80) |
| non-SWB factors (J29) | choices (Y60) |