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On the Curvature of the Reporting Function from Objective Reality to Subjective Feelings

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  • Oswald, Andrew J.

    () (University of Warwick)

Abstract

I suggest the idea of a reporting function, r(.), from reality to feelings. The ‘happiness’ literature claims we have demonstrated diminishing marginal utility of income. I show not, and that knowing r(.)’s curvature is crucial. A quasi-experiment on heights is studied.

Suggested Citation

  • Oswald, Andrew J., 2008. "On the Curvature of the Reporting Function from Objective Reality to Subjective Feelings," IZA Discussion Papers 3344, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp3344
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    References listed on IDEAS

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    1. Nattavudh Powdthavee, 2005. "Unhappiness and Crime: Evidence from South Africa," Economica, London School of Economics and Political Science, vol. 72(3), pages 531-547, August.
    2. Di Tella, Rafael & Haisken-De New, John & MacCulloch, Robert, 2010. "Happiness adaptation to income and to status in an individual panel," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 834-852, December.
    3. Oswald, Andrew J, 1997. "Happiness and Economic Performance," Economic Journal, Royal Economic Society, vol. 107(445), pages 1815-1831, November.
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    5. 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, pages 1061-1077.
    6. Layard, R. & Mayraz, G. & Nickell, S., 2008. "The marginal utility of income," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1846-1857, August.
    7. Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Why Are the Unemployed So Unhappy? Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 65(257), pages 1-15, February.
    8. JOHN HOROWITZ & J. LIST & K. E. McCONNELL, 2007. "A Test of Diminishing Marginal Value," Economica, London School of Economics and Political Science, vol. 74(296), pages 650-663, November.
    9. Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
    10. Richard Easterlin, 2005. "Diminishing Marginal Utility of Income? Caveat Emptor," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 70(3), pages 243-255, February.
    11. Nicoletti, Giuseppe & Pryor, Frederic L., 2006. "Subjective and objective measures of governmental regulations in OECD nations," Journal of Economic Behavior & Organization, Elsevier, vol. 59(3), pages 433-449, March.
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    Cited by:

    1. David Comerford & Liam Delaney & Colm Harmon, 2009. "Experimental Tests of Survey Responses to Expenditure Questions," Fiscal Studies, Institute for Fiscal Studies, pages 419-433.
    2. Betsey Stevenson & Justin Wolfers, 2013. "Subjective Well-Being and Income: Is There Any Evidence of Satiation?," American Economic Review, American Economic Association, vol. 103(3), pages 598-604, May.
    3. Proto, Eugenio & Sgroi, Daniel, 2017. "Biased beliefs and imperfect information," Journal of Economic Behavior & Organization, Elsevier, vol. 136(C), pages 186-202.
    4. Stefanie Schurer & Jongsay Yong, 2010. "Personality, Well-being and Heterogeneous Valuations of Income and Work," Melbourne Institute Working Paper Series wp2010n14, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    5. Zheng Fang & Chris Sakellariou, 2016. "Social Insurance, Income and Subjective Well-Being of Rural Migrants in China—An Application of Unconditional Quantile Regression," Journal of Happiness Studies, Springer, vol. 17(4), pages 1635-1657, August.
    6. Zhang Huafeng, 2016. "Household vulnerability and economic status during disaster recovery and its determinants: a case study after the Wenchuan earthquake," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 83(3), pages 1505-1526, September.
    7. Daron Acemoglu & Simon Johnson & Pablo Querubin & James A. Robinson, 2008. "When Does Policy Reform Work? The Case of Central Bank Independence," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 351-429.
    8. Betsey Stevenson & Justin Wolfers, 2008. "Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 1-102.
    9. Nyborg, Karine, 2014. "Project evaluation with democratic decision-making: What does cost–benefit analysis really measure?," Ecological Economics, Elsevier, vol. 106(C), pages 124-131.
    10. Ingebjørg Kristoffersen, 2017. "The Metrics of Subjective Wellbeing Data: An Empirical Evaluation of the Ordinal and Cardinal Comparability of Life Satisfaction Scores," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 130(2), pages 845-865, January.
    11. Strulik, Holger, 2015. "Preferences, income, and life satisfaction: An equivalence result," Mathematical Social Sciences, Elsevier, vol. 75(C), pages 20-26.
    12. Schurer, S. & Yong, J., 2012. "Personality, well-being and the marginal utility of income: What can we learn from random coefficient models?," Health, Econometrics and Data Group (HEDG) Working Papers 12/01, HEDG, c/o Department of Economics, University of York.
    13. Deckers Thomas & Falk Armin & Schildberg-Hörisch Hannah, 2016. "Nominal or Real? The Impact of Regional Price Levels on Satisfaction with Life," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(3), pages 1337-1358, September.
    14. Timothy N. Bond & Kevin Lang, 2014. "The Sad Truth About Happiness Scales," NBER Working Papers 19950, National Bureau of Economic Research, Inc.
    15. Gil, Joan & Mora, Toni, 2011. "The determinants of misreporting weight and height: The role of social norms," Economics & Human Biology, Elsevier, vol. 9(1), pages 78-91, January.
    16. O'Donnell, Gus & Oswald, Andrew J., 2015. "National well-being policy and a weighted approach to human feelings," Ecological Economics, Elsevier, vol. 120(C), pages 59-70.
    17. Proto, Eugenio & Sgroi, Daniel, 2012. "Self-Centered Beliefs : An Empirical Approach," The Warwick Economics Research Paper Series (TWERPS) 978, University of Warwick, Department of Economics.
    18. Betsey Stevenson & Justin Wolfers, 2008. "Happiness Inequality in the United States," The Journal of Legal Studies, University of Chicago Press, vol. 37(S2), pages 33-79, June.
    19. Prinz, Aloys & Bünger, Björn, 2011. "The usefulness of a Happy Income Index," CAWM Discussion Papers 15, University of Münster, Center of Applied Economic Research Münster (CAWM).
    20. Raphael Studer & Rainer Winkelmann, 2014. "Reported Happiness, Fast and Slow," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 117(3), pages 1055-1067, July.
    21. Aloys Prinz & Björn Bünger, "undated". "Living in a material world: Happy Income and Happy Life Years," Working Papers 200116, Institute of Spatial and Housing Economics, Munster Universitary.
    22. Proto, Eugenio & Sgroi, Daniel, 2011. "False Consensus in Economic Agents," The Warwick Economics Research Paper Series (TWERPS) 968, University of Warwick, Department of Economics.
    23. Bille, Trine & Fjællegaard, Cecilie Bryld & Frey, Bruno S. & Steiner, Lasse, 2013. "Happiness in the arts—International evidence on artists’ job satisfaction," Economics Letters, Elsevier, vol. 121(1), pages 15-18.
    24. Bert Van Landeghem, 2012. "Panel Conditioning and Self-Reported Satisfaction: Evidence from International Panel Data and Repeated Cross-Sections," SOEPpapers on Multidisciplinary Panel Data Research 484, DIW Berlin, The German Socio-Economic Panel (SOEP).

    More about this item

    Keywords

    height; diminishing marginal utility; money; concavity;

    JEL classification:

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

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