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Money, Happiness, and Aspirations: An Experimental Study

  • Michael McBride


    (Department of Economics, University of California-Irvine)

The past decade has witnessed an explosion of interest in the scientific study of happiness. Economists, in particular, find that happiness increases in income but decreases in income aspirations, and this work prompts examination of how aspirations form and adapt over time. This paper presents results from the first experimental study of how multiple factors -- past payments, social comparisons, and expectations -- influence aspiration formation and reported satisfaction. I find that expectations and social comparisons significantly affect reported satisfaction, and that subjects care relatively more about social comparisons once they have achieved a satisfactory outcome. These findings support an aspirations-based theory of happiness.

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Paper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 060721.

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Length: 42 pages
Date of creation: Mar 2007
Date of revision: Jul 2008
Handle: RePEc:irv:wpaper:060721
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