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The triumph of hope over regret: A note on the utility value of good health expectations

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Abstract

In this paper we compare three theories of utility formation: prospect theory, regret theory, and a combination which additionally allows for direct utility flows from positive expectations. We then test which of these theories best explains actual connections between health and welfare over time, using a rich Australian data set on health expectations, economic behavior, and well-being. We find evidence supporting a much stronger utility impact of health expectations than of regret regarding health. Our results support the idea than unless individuals are able to alter their future health outcomes by changing their behavior, a benevolent health care provider should only provide good information about the future.

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  • Paul Frijters & Gigi Foster & David W. Johnston, 2012. "The triumph of hope over regret: A note on the utility value of good health expectations," Discussion Papers Series 451, School of Economics, University of Queensland, Australia.
  • Handle: RePEc:qld:uq2004:451
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    File URL: http://www.uq.edu.au/economics/abstract/451.pdf
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Hope keeps people happy and healthy so dont always tell the truth
      by Paul Frijters in Core Economics on 2012-05-02 04:39:29
    2. Hope keeps people happy and healthy so dont always tell the truth
      by Paul Frijters in Core Economics on 2012-05-02 04:39:29
    3. Hope keeps people happy and healthy so dont always tell the truth
      by Paul Frijters in Club Troppo on 2012-05-02 04:36:35
    4. Lying politicians, part I: Why do they do it?
      by Paul Frijters in Core Economics on 2012-10-29 06:21:05
    5. Lying politicians, part I: Why do they do it?
      by Paul Frijters in Club Troppo on 2012-10-29 06:21:01

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    Cited by:

    1. Tufan Ekici & Selda Koydemir, 2016. "Income Expectations and Happiness: Evidence from British Panel Data," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 11(2), pages 539-552, June.
    2. Au, Nicole & Johnston, David W., 2014. "Self-assessed health: What does it mean and what does it hide?," Social Science & Medicine, Elsevier, vol. 121(C), pages 21-28.
    3. Foster, Gigi & Frijters, Paul, 2014. "The formation of expectations: Competing theories and new evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 53(C), pages 66-81.

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