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

Listed author(s):
  • 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)

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.

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File URL: http://www.aiccon.it/pubblicazione/136-ibridazione-innovazione-sistemica-percorsi-sviluppo-dellimpresa-sociale-italiana/
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Paper provided by Associazione Italiana per la Cultura della Cooperazione e del Non Profit in its series AICCON Working Papers with number 137-2014.

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Length: 42 pages
Date of creation: 16 Jul 2014
Handle: RePEc:ris:aiccon:2014_137
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