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Does Happiness Adapt? A Longitudinal Study of Disability with Implications for Economists and Judges

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Author Info
Andrew J. Oswald () (University of Warwick and IZA Bonn)
Nattavudh Powdthavee () (University of London)

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Abstract

Economics ignores the possibility of hedonic adaptation (the idea that people bounce back from utility shocks). This paper argues that economists are wrong to do so. It provides longitudinal evidence that individuals who become disabled go on to exhibit recovery in mental wellbeing. Adaptation to severe disability, however, is shown to be incomplete. The paper suggests ways to calculate the level of compensatory damages for the pain and suffering from disablement. Courts all over the world currently use ad hoc methods.

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File URL: ftp://repec.iza.org/RePEc/Discussionpaper/dp2208.pdf
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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2208.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 40 pages
Date of creation: Jul 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2208

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Related research
Keywords: disability; adaptation; happiness; legal compensation; wellbeing; GHQ scores;

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Find related papers by JEL classification:
D1 - Microeconomics - - Household Behavior
I3 - Health, Education, and Welfare - - Welfare and Poverty
I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
K0 - Law and Economics - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  2. Christopher D. Carroll & Jody Overland & David N. Weil, 2000. "Saving and Growth with Habit Formation," American Economic Review, American Economic Association, vol. 90(3), pages 341-355, June. [Downloadable!] (restricted)
    Other versions:
  3. Blanchflower, David G. & Oswald, Andrew J., 2004. "Well-being over time in Britain and the USA," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1359-1386, July. [Downloadable!] (restricted)
    Other versions:
  4. Clark, Andrew E., 1999. "Are wages habit-forming? evidence from micro data," Journal of Economic Behavior & Organization, Elsevier, vol. 39(2), pages 179-200, June. [Downloadable!] (restricted)
  5. Jonathan Gardner & Andrew J. Oswald, 2006. "Do divorcing couples become happier by breaking up?," Journal Of The Royal Statistical Society Series A, Royal Statistical Society, vol. 169(2), pages 319-336. [Downloadable!] (restricted)
    Other versions:
  6. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
    Other versions:
  7. Andrew Clark & Ed Diener & Yannis Georgellis & Richard E. Lucas, 2003. "Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis," DELTA Working Papers 2003-14, DELTA (Ecole normale supérieure). [Downloadable!]
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  8. Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, vol. 111(473), pages 465-84, July. [Downloadable!] (restricted)
  9. Rafael Di Tella & John Haisken-De New & Robert MacCulloch, 2007. "Happiness Adaptation to Income and to Status in an Individual Panel," NBER Working Papers 13159, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. Stutzer, Alois, 2004. "The role of income aspirations in individual happiness," Journal of Economic Behavior & Organization, Elsevier, vol. 54(1), pages 89-109, May. [Downloadable!] (restricted)
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  15. Easterlin, Richard A., 2005. "A puzzle for adaptive theory," Journal of Economic Behavior & Organization, Elsevier, vol. 56(4), pages 513-521, April. [Downloadable!] (restricted)
  16. Rafael Di Tella & Robert J. MacCulloch & Andrew J. Oswald, 2003. "The Macroeconomics of Happiness," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 809-827, 09. [Downloadable!] (restricted)
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  17. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May. [Downloadable!] (restricted)
  18. Erzo F. P. Luttmer, 2005. "Neighbors as Negatives: Relative Earnings and Well-Being," The Quarterly Journal of Economics, MIT Press, vol. 120(3), pages 963-1002, August.
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  19. Carroll, Christopher D. & Weil, David N., 1994. "Saving and growth: a reinterpretation," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 133-192, June. [Downloadable!] (restricted)
    Other versions:
  20. Andrew J. Oswald, 2005. "On the Common Claim that Happiness Equations Demonstrate Diminishing Marginal Utility of Income," IZA Discussion Papers 1781, Institute for the Study of Labor (IZA). [Downloadable!]
  21. Richard Layard, 2006. "Happiness and Public Policy: a Challenge to the Profession," Economic Journal, Royal Economic Society, vol. 116(510), pages C24-C33, 03. [Downloadable!] (restricted)
  22. Richard E. Lucas & Andrew Clark & Yannis Georgellis & Ed Diener, 2002. "Re-Examining Adaptation and the Setpoint Model of Happiness: Reactions to Changes in Marital Status," DELTA Working Papers 2002-08, DELTA (Ecole normale supérieure). [Downloadable!]
  23. Bruno S. Frey & Stephan Meier, . "Social Comparisons and Pro-social Behavior - Testing ‘Conditional Cooperation’ in a Field Experiment," IEW - Working Papers iewwp162, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  24. Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Why Are the Unemployed So Unhappy? Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 65(257), pages 1-15, February. [Downloadable!] (restricted)
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    Other versions:
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