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“De Gustibus Errari (pot)Est”: Utility Misprediction, Preferences for Well-being and Life Satisfaction

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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

  • Leonardo Becchetti & Pierluigi Conzo, 2014. "“De Gustibus Errari (pot)Est”: Utility Misprediction, Preferences for Well-being and Life Satisfaction," CEIS Research Paper 327, Tor Vergata University, CEIS, revised 08 Aug 2014.
  • Handle: RePEc:rtv:ceisrp:327
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    1. repec:eee:jcecon:v:46:y:2018:i:3:p:754-769 is not listed on IDEAS
    2. Pham, Tho & Talavera, Oleksandr & Zhang, Mao, 2018. "Self-employment, financial development, and well-being: Evidence from China, Russia, and Ukraine," Journal of Comparative Economics, Elsevier, vol. 46(3), pages 754-769.

    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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