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Relative Payoffs and Happiness: An Experimental Study

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Author Info
Gary Charness
Brit Grosskopf

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Abstract

Some current utility models presume that people are concerned with their relative standing in a reference group. If this is true, do certain types care more about this than others? Using simple binary decisions and self-reported happiness, we investigate both the prevalence of ``difference aversion'' and whether happiness levels influence the taste for social comparisons. Our decision tasks distinguish between a person’s desire to achieving the social optimum, equality or advantageous relative standing. Most people appear to disregard relative payoffs, instead typically making choices resulting in higher social payoffs. While we do not find a strong general correlation between happiness and concern for relative payoffs, we do observe that a willingness to lower another person’s payoff below one’s own (competitive preferences) seems correlated with unhappiness.

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Publisher Info
Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 436.

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Date of creation: Aug 1999
Date of revision: Jan 2000
Handle: RePEc:upf:upfgen:436

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Related research
Keywords: Happiness; relative payoffs; social preferences; subjective well-being; Leex;

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Find related papers by JEL classification:
A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
B49 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Other
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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  15. Bewley, Truman F., 1998. "Why not cut pay?," European Economic Review, Elsevier, vol. 42(3-5), pages 459-490, May. [Downloadable!] (restricted)
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