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The triumph of hope over disappointment: A note on the utility value of good health expectations

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  • Foster, Gigi
  • Frijters, Paul
  • Johnston, David W.

Abstract

In this paper, we present and test the empirical implications of competing theories about how expectations of outcomes affect utility. In the first utility formulation, which is consistent with particular interpretations of disappointment, prospect theory and regret theory, individuals receive negative utility from outcomes that were worse than expected. This directly implies that expectations themselves enter utility negatively. The second utility formulation incorporates anticipatory savoring, where positive expectations about the future directly lead to more utility today. We test which of these formulations best explains actual connections between health and welfare over time, using data from the Household Income and Labour Dynamics in Australia survey. Estimated coefficients from fixed-effects ordered logit models support a strong positive utility impact of positive expectations: expecting good health in the future increases happiness now. Our results are one argument for benevolent health care providers to allow individuals to maintain unrealistically positive expectations about the future.

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  • Foster, Gigi & Frijters, Paul & Johnston, David W., 2012. "The triumph of hope over disappointment: A note on the utility value of good health expectations," Journal of Economic Psychology, Elsevier, vol. 33(1), pages 206-214.
    • Handle: RePEc:eee:joepsy:v:33:y:2012:i:1:p:206-214
    DOI: 10.1016/j.joep.2011.09.010
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    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Hope keeps people happy and healthy so dont always tell the truth
      by Paul Frijters in Club Troppo on 2012-05-02 04:36:35
    2. Lying politicians, part I: Why do they do it?
      by Paul Frijters in Club Troppo on 2012-10-29 06:21:01
    3. Hope keeps people happy and healthy so dont always tell the truth
      by Paul Frijters in Core Economics on 2012-05-02 04:39:29
    4. Lying politicians, part I: Why do they do it?
      by Paul Frijters in Core Economics on 2012-10-29 06:21:05
    5. Hope keeps people happy and healthy so dont always tell the truth
      by Paul Frijters in Core Economics on 2012-05-02 04:39:29

    Citations

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    Cited by:

    1. Giorgetta, Cinzia & Zeelenberg, Marcel & Ferlazzo, Fabio & D’Olimpio, Francesca, 2012. "Cultural variation in the role of responsibility in regret and disappointment: The Italian case," Journal of Economic Psychology, Elsevier, vol. 33(4), pages 726-737.
    2. Alberto Prati & Claudia Senik, 2020. "Feeling good or feeling better?," AMSE Working Papers 2014, Aix-Marseille School of Economics, France.
    3. Bahadır Dursun & Resul Cesur, 2016. "Transforming lives: the impact of compulsory schooling on hope and happiness," Journal of Population Economics, Springer;European Society for Population Economics, vol. 29(3), pages 911-956, July.
    4. Au, N. & Johnston, D. W., 2013. "An econometric analysis of self-assessed health: what does it mean and what is it hiding?," Health, Econometrics and Data Group (HEDG) Working Papers 13/31, HEDG, c/o Department of Economics, University of York.
    5. Emma Pleeging & Martijn Burger & Job Exel, 2021. "The Relations between Hope and Subjective Well-Being: a Literature Overview and Empirical Analysis," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 16(3), pages 1019-1041, June.
    6. Emma Pleeging & Martijn Burger & Job Exel, 2021. "Hope Mediates the Relation between Income and Subjective Well-Being," Journal of Happiness Studies, Springer, vol. 22(5), pages 2075-2102, June.
    7. Frijters, Paul & Johnston, David W. & Shields, Michael A. & Sinha, Kompal, 2015. "A lifecycle perspective of stock market performance and wellbeing," Journal of Economic Behavior & Organization, Elsevier, vol. 112(C), pages 237-250.
    8. Tufan Ekici & Selda Koydemir, 2016. "Income Expectations and Happiness: Evidence from British Panel Data," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 11(2), pages 539-552, June.
    9. Efstratia Arampatzi & Martijn Burger & Spyridon Stavropoulos & Louis Tay, 2020. "The Role of Positive Expectations for Resilience to Adverse Events: Subjective Well-Being Before, During and After the Greek Bailout Referendum," Journal of Happiness Studies, Springer, vol. 21(3), pages 965-995, March.
    10. Au, Nicole & Johnston, David W., 2014. "Self-assessed health: What does it mean and what does it hide?," Social Science & Medicine, Elsevier, vol. 121(C), pages 21-28.
    11. Foster, Gigi & Frijters, Paul, 2014. "The formation of expectations: Competing theories and new evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 53(C), pages 66-81.

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    More about this item

    Keywords

    Behavioral economics; Optimism; Micro-econometrics;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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