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Does Happiness Adapt? A Longitudinal Study of Disability with Implications for Economists and Judges

Author

Listed:
  • Oswald, Andrew J.

    () (University of Warwick)

  • Powdthavee, Nattavudh

    () (University of Warwick)

Abstract

Economics ignores the possibility of hedonic adaptation (the idea that people bounce back from utility shocks). This paper argues that economists are wrong to do so. It provides longitudinal evidence that individuals who become disabled go on to exhibit recovery in mental wellbeing. Adaptation to severe disability, however, is shown to be incomplete. The paper suggests ways to calculate the level of compensatory damages for the pain and suffering from disablement. Courts all over the world currently use ad hoc methods.

Suggested Citation

  • Oswald, Andrew J. & Powdthavee, Nattavudh, 2006. "Does Happiness Adapt? A Longitudinal Study of Disability with Implications for Economists and Judges," IZA Discussion Papers 2208, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp2208
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    References listed on IDEAS

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    More about this item

    Keywords

    disability; adaptation; happiness; legal compensation; wellbeing; GHQ scores;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • K0 - Law and Economics - - General

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