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Hedonic Capital

Author

Listed:
  • Graham, Liam

    () (University College London)

  • Oswald, Andrew J.

    () (University of Warwick)

Abstract

This paper proposes a new way to think about happiness. It distinguishes between stocks and flows. Central to the analysis is a concept we call ‘hedonic capital’. The paper sets out a model of the dynamics of wellbeing in which bad life-shocks are smoothed by the drawing down of hedonic capital. The model fits the patterns found in the empirical literature: the existence of a stable level of wellbeing and a tendency to return gradually towards that level. It offers a theory of hedonic adaptation.

Suggested Citation

  • Graham, Liam & Oswald, Andrew J., 2006. "Hedonic Capital," IZA Discussion Papers 2079, Institute for the Study of Labor (IZA).
    • Handle: RePEc:iza:izadps:dp2079
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Nattavudh Powdthavee, 2012. "Resilience to Economic Shocks and the Long Reach of Childhood Bullying," CEP Discussion Papers dp1173, Centre for Economic Performance, LSE.
    2. Oswald, Andrew J. & Powdthavee, Nattavudh, 2008. "Does happiness adapt? A longitudinal study of disability with implications for economists and judges," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1061-1077, June.
    3. Senik, Claudia, 2008. "Is man doomed to progress?," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 140-152, October.
    4. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2006. "Income and happiness: Evidence, explanations and economic implications," Working Papers halshs-00590436, HAL.
    5. Francesco Ferrante, 2009. "Education, Aspirations and Life Satisfaction," Kyklos, Wiley Blackwell, vol. 62(4), pages 542-562, November.
    6. Konow, James & Earley, Joseph, 2008. "The Hedonistic Paradox: Is homo economicus happier," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 1-33, February.
    7. Konow, James, 2010. "Mixed feelings: Theories of and evidence on giving," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 279-297, April.
    8. Stutzer, Alois & Frey, Bruno S., 2012. "Recent Developments in the Economics of Happiness: A Selective Overview," IZA Discussion Papers 7078, Institute for the Study of Labor (IZA).
    9. Frijters, Paul & Johnston, David W. & Shields, Michael A., 2008. "Happiness Dynamics with Quarterly Life Event Data," IZA Discussion Papers 3604, Institute for the Study of Labor (IZA).
    10. Senik, Claudia, 2008. "Is man doomed to progress?," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 140-152, October.

    More about this item

    Keywords

    adaptation; wellbeing; evolution; happiness; habituation;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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