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Happiness as a Driver of Risk-Avoiding Behavior

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  • Jan-Emmanuel De Neve
  • Robert J. B. Goudie
  • Sach Mukherjee
  • Andrew J. Oswald
  • Stephen Wu

Abstract

Most governments try to discourage their citizens from taking extreme risks with their health and lives. Yet, for reasons not understood, many people continue to do so. We suggest a new approach to this longstanding question. First, we show that expected-utility theory predicts that 'happier' people will be less attracted to risky behaviors. Second, using BRFSS data on seatbelt use in a sample of 300,000 Americans, we document evidence strongly consistent with that prediction. Our result is demonstrated with various methodological approaches, including Bayesian model-selection and instrumental-variable estimation (based on unhappiness caused by widowhood). Third, using data on road accidents from the Add Health data set, we find strongly corroborative longitudinal evidence. These results suggest that government policy may need to address the underlying happiness of individuals rather than focus on behavioural symptoms.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1126.

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Date of creation: Feb 2012
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Handle: RePEc:cep:cepdps:dp1126

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: subjective well-being; risky behaviors; effects of well-being; rational carelessness;

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References

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Citations

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Cited by:
  1. Abel Brodeur & Sarah Flèche, 2013. "Where the Streets Have a Name: Income Comparisons in the US," CEP Discussion Papers dp1196, Centre for Economic Performance, LSE.
  2. Krause, Annabelle, 2012. "Don't Worry, Be Happy? Happiness and Reemployment," IZA Discussion Papers 7107, Institute for the Study of Labor (IZA).
  3. Krause, Annabelle, 2013. "Don’t worry, be happy? Happiness and reemployment," Journal of Economic Behavior & Organization, Elsevier, vol. 96(C), pages 1-20.

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