Working Paper: NBER ID: w21098
Authors: Sebastian Galiani; Paul J. Gertler; Raimundo Undurraga
Abstract: Subjective well-being may not improve in step with increases in material well-being due to hedonic adaptation, a psychological process that attenuates the long-term emotional impact of a favorable or unfavorable change in circumstances, such that people’s happiness eventually returns to a stable reference level. We use a multi-country field experiment to examine the impact of the provision of improved housing to extremely poor populations on subjective measures of well-being to test whether poor populations exhibit hedonic adaptation when their basic housing needs are met. After sixteen months, we find that subjective perceptions of well-being improve substantially for recipients of better housing but that after, on average, eight additional months, 60% of that gain disappears.
Keywords: subjective wellbeing; hedonic adaptation; housing improvement; slum dwellers
JEL Codes: I31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Subjective wellbeing (I31) | Hedonic adaptation (D11) |
| Improved housing (R21) | Subjective wellbeing (I31) |
| Improved housing (R21) | Satisfaction with housing quality (R21) |
| Improved housing (R21) | Overall quality of life (I31) |