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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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    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 Club Troppo on 2012-05-02 04:36:35
    2. Lying politicians, part I: Why do they do it?
      by Paul Frijters in Club Troppo on 2012-10-29 06:21:01
    3. 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
    4. Lying politicians, part I: Why do they do it?
      by Paul Frijters in Core Economics on 2012-10-29 06:21:05
    5. 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

    Citations

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    Cited by:

    1. Giorgetta, Cinzia & Zeelenberg, Marcel & Ferlazzo, Fabio & D’Olimpio, Francesca, 2012. "Cultural variation in the role of responsibility in regret and disappointment: The Italian case," Journal of Economic Psychology, Elsevier, vol. 33(4), pages 726-737.
    2. Alberto Prati & Claudia Senik, 2020. "Feeling good or feeling better?," PSE Working Papers halshs-02545228, HAL.
    3. Bahadır Dursun & Resul Cesur, 2016. "Transforming lives: the impact of compulsory schooling on hope and happiness," Journal of Population Economics, Springer;European Society for Population Economics, vol. 29(3), pages 911-956, July.
    4. Au, N. & Johnston, D. W., 2013. "An econometric analysis of self-assessed health: what does it mean and what is it hiding?," Health, Econometrics and Data Group (HEDG) Working Papers 13/31, HEDG, c/o Department of Economics, University of York.
    5. Emma Pleeging & Martijn Burger & Job Exel, 2021. "The Relations between Hope and Subjective Well-Being: a Literature Overview and Empirical Analysis," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 16(3), pages 1019-1041, June.
    6. Emma Pleeging & Martijn Burger & Job Exel, 2021. "Hope Mediates the Relation between Income and Subjective Well-Being," Journal of Happiness Studies, Springer, vol. 22(5), pages 2075-2102, June.
    7. Frijters, Paul & Johnston, David W. & Shields, Michael A. & Sinha, Kompal, 2015. "A lifecycle perspective of stock market performance and wellbeing," Journal of Economic Behavior & Organization, Elsevier, vol. 112(C), pages 237-250.
    8. 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.
    9. Efstratia Arampatzi & Martijn Burger & Spyridon Stavropoulos & Louis Tay, 2020. "The Role of Positive Expectations for Resilience to Adverse Events: Subjective Well-Being Before, During and After the Greek Bailout Referendum," Journal of Happiness Studies, Springer, vol. 21(3), pages 965-995, March.
    10. 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.
    11. 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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    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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