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"De gustibus errari (pot)est": utility misprediction, preferences for well-being and life

Author

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  • Becchetti, Leonardo

    () (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)

  • Conzo, Pierluigi

    () (Associazione Italiana per la Cultura della Cooperazione e del Non Profit)

Abstract

The life satisfaction literature generally focuses on how life events affect subjective well-being. Through a contingent valuation survey we test whether well-being preferences have significant impact on life satisfaction. A sample of respondents is asked to simulate a policymaker decision consisting in allocating scarce financial resources among 11 well-being domains. Consistently with the utility misprediction hypothesis, we find that the willingness to invest more in the economic well-being domain is negatively correlated with life satisfaction. Our findings are shown to be robust when we account for unobservables related to economic fragility and non-random sample selection. Reverse causality and omitted variable bias are controlled for with instrumental variables and a sensitivity analysis on departures from exogeneity assumptions. Subsample estimates document that the less educated are more affected by the problem.

Suggested Citation

  • Becchetti, Leonardo & Conzo, Pierluigi, 2014. ""De gustibus errari (pot)est": utility misprediction, preferences for well-being and life," AICCON Working Papers 137-2014, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
  • Handle: RePEc:ris:aiccon:2014_137
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    File URL: http://www.aiccon.it/pubblicazione/136-ibridazione-innovazione-sistemica-percorsi-sviluppo-dellimpresa-sociale-italiana/
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    More about this item

    Keywords

    life satisfaction; well-being preferences; utility misprediction; subjective well-being;

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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