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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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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2208.

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Length: 40 pages
Date of creation: Jul 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2208

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Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
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Related research
Keywords: disability adaptation happiness legal compensation wellbeing GHQ scores

Other versions of this item:

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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    Other versions:
  2. Andrew E. Clark & Yannis Georgellis, 2002. "Unemployment Alters the Set-Point for Life Satisfaction," Economics and Finance Discussion Papers 02-16, Economics and Finance Section, School of Social Sciences, Brunel University. [Downloadable!]
    Other versions:
  3. Oswald, Andrew, 1997. "Happiness and Economic Performance," The Warwick Economics Research Paper Series (TWERPS) 478, University of Warwick, Department of Economics. [Downloadable!]
    Other versions:
  4. 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)
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  5. 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)
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  6. 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)
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  8. 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!]
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  10. 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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  11. 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)
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  18. Daniel Kahneman & Robert Sugden, 2005. "Experienced Utility as a Standard of Policy Evaluation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 32(1), pages 161-181, 09. [Downloadable!] (restricted)
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  20. 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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  24. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, 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.)

  1. Oswald, Andrew J & Powdthavee, Nattavudh, 2007. "Obesity, Unhappiness, and The Challenge of Affluence : Theory and Evidence," The Warwick Economics Research Paper Series (TWERPS) 793, University of Warwick, Department of Economics. [Downloadable!]
    Other versions:
  2. Blanchflower, David G. & Oswald, Andrew J., 2007. "Is Well-being U-Shaped over the Life Cycle?," The Warwick Economics Research Paper Series (TWERPS) 826, University of Warwick, Department of Economics. [Downloadable!]
    Other versions:
  3. José Alberto Molina & María Navarro & Ian Walker, 2007. "Mums and Their Sons, Dads and Their Daughters: Panel Data Evidence of Interdependent Marginal Utilities across 14 EU Countries," IZA Discussion Papers 2734, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Andrew J. Oswald & Nattavudh Powdthavee, 2007. "Death, Happiness, and the Calculation of Compensatory Damages," IZA Discussion Papers 3159, Institute for the Study of Labor (IZA). [Downloadable!]
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  5. Gardner, Jonathan & Oswald, Andrew J., 2006. "Money and Mental Wellbeing : A Longitudinal Study of Medium-Sized Lottery Wins," The Warwick Economics Research Paper Series (TWERPS) 754, University of Warwick, Department of Economics. [Downloadable!]
    Other versions:
  6. Liam Graham & Andrew J. Oswald, 2006. "Hedonic Capital," IZA Discussion Papers 2079, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
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