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The Half-Life of Happiness: Hedonic Adaptation in the Subjective Well-Being of Poor Slum Dwellers to the Satisfaction of Basic Housing Needs

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  • Sebastian Galiani
  • Paul J Gertler
  • Raimundo Undurraga

Abstract

Subjective well-being may not improve in step with increases in material well-being due to hedonic adaptation, a psychological process that attenuates the long-term emotional impact of a favorable or unfavorable change in circumstances. As a result, people’s degree of happiness eventually returns to a stable reference level. We use a multicountry field experiment to examine the impact on subjective measures of well-being of the provision of improved housing to extremely poor populations in order to test whether they exhibit hedonic adaptation when their basic housing needs are met. After 16 months, we find that subjective perceptions of well-being improve substantially for recipients of improved housing but that, after, on average, eight additional months, 60% of that gain has dissipated. Extrapolation achieved through estimation of a structural model of hedonic adaptation suggests that the decay rate of the treatment effect is 20% per month. As a result, after 28 months of treatment exposure, we forecast that the entire treatment effect will have disappeared.

Suggested Citation

  • Sebastian Galiani & Paul J Gertler & Raimundo Undurraga, 2018. "The Half-Life of Happiness: Hedonic Adaptation in the Subjective Well-Being of Poor Slum Dwellers to the Satisfaction of Basic Housing Needs," Journal of the European Economic Association, European Economic Association, vol. 16(4), pages 1189-1233.
    • Handle: RePEc:oup:jeurec:v:16:y:2018:i:4:p:1189-1233.
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    File URL: http://hdl.handle.net/10.1093/jeea/jvx042
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    Cited by:

    1. Zavadskas, Edmundas Kazimieras & Kaklauskas, Arturas & Bausys, Romualdas & Naumcik, Andrej & Ubarte, Ieva, 2021. "Integrated hedonic-utilitarian valuation of the built environment by neutrosophic INVAR method," Land Use Policy, Elsevier, vol. 101(C).
    2. Davis, Lucas W. & Martinez, Sebastian & Taboada, Bibiana, 2020. "How effective is energy-efficient housing? Evidence from a field trial in Mexico," Journal of Development Economics, Elsevier, vol. 143(C).
    3. Paula Carrasco & Rodrigo Ceni & Ivone Perazzo & Gonzalo Salas, 2021. "Are Not Any Silver Linings in the Cloud? Subjective Well-being Among Deprived Young People," Journal of Happiness Studies, Springer, vol. 22(2), pages 491-516, February.
    4. Henson, Rosie Mae & Ortigoza, Ana & Martinez-Folgar, Kevin & Baeza, Fernando & Caiaffa, Waleska & Vives Vergara, Alejandra & Diez Roux, Ana V. & Lovasi, Gina, 2020. "Evaluating the health effects of place-based slum upgrading physical environment interventions: A systematic review (2012–2018)," Social Science & Medicine, Elsevier, vol. 261(C).
    5. Galiani, Sebastian & Gertler, Paul J. & Undurraga, Raimundo, 2021. "Aspiration adaptation in resource-constrained environments," Journal of Urban Economics, Elsevier, vol. 123(C).
    6. Micael Dahlen & Helge Thorbjørnsen, 2022. "Individuals’ Assessments of Their Own Wellbeing, Subjective Welfare, and Good Life: Four Exploratory Studies," IJERPH, MDPI, vol. 19(19), pages 1-10, September.
    7. Lars Ivar Oppedal Berge & Kjetil Bjorvatn & Fortunata Makene & Linda Helgesson Sekei & Vincent Somville & Bertil Tungodden, 2022. "On the Doorstep of Adulthood: Empowering Economic and Fertility Choices of Young Women," Working Papers 2022-035, Human Capital and Economic Opportunity Working Group.
    8. Juan Palacios & Piet Eichholtz & Nils Kok, 2020. "Moving to productivity: The benefits of healthy buildings," PLOS ONE, Public Library of Science, vol. 15(8), pages 1-17, August.
    9. Cornelius Christian & Lukas Hensel & Christopher Roth, 2019. "Income Shocks and Suicides: Causal Evidence From Indonesia," The Review of Economics and Statistics, MIT Press, vol. 101(5), pages 905-920, December.
    10. Paula Carrasco & Rodrigo Ceni & Ivonne Perazzo & Gonzalo Salas, 2019. "Are not any silver in the cloud? Subjective well-being among deprived young people," Documentos de Trabajo (working papers) 19-09, Instituto de Economía - IECON.
    11. Hai-Anh H. Dang & Michael M. Lokshin & Kseniya Abanokova, 2019. "Did the Poor Adapt to Their Circumstances? Evidence from Long-run Russian Panel Data," Economics Bulletin, AccessEcon, vol. 39(4), pages 2258-2274.
    12. Ferrara, Antonella Rita & Dijkstra, Lewis & McCann, Philip & Nisticó, Rosanna, 2022. "The response of regional well-being to place-based policy interventions," Regional Science and Urban Economics, Elsevier, vol. 97(C).

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