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Hedonic Capital

Author

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  • Graham, Liam

    (University College London)

  • Oswald, Andrew J.

    (University of Warwick)

Abstract

This paper proposes a new way to think about happiness. It distinguishes between stocks and flows. Central to the analysis is a concept we call ‘hedonic capital’. The paper sets out a model of the dynamics of wellbeing in which bad life-shocks are smoothed by the drawing down of hedonic capital. The model fits the patterns found in the empirical literature: the existence of a stable level of wellbeing and a tendency to return gradually towards that level. It offers a theory of hedonic adaptation.

Suggested Citation

  • Graham, Liam & Oswald, Andrew J., 2006. "Hedonic Capital," The Warwick Economics Research Paper Series (TWERPS) 745, University of Warwick, Department of Economics.
  • Handle: RePEc:wrk:warwec:745
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    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/twerp_745.pdf
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    Cited by:

    1. Nattavudh Powdthavee, 2012. "Resilience to Economic Shocks and the Long Reach of Childhood Bullying," CEP Discussion Papers dp1173, Centre for Economic Performance, LSE.
    2. Oswald, Andrew J. & Powdthavee, Nattavudh, 2008. "Does happiness adapt? A longitudinal study of disability with implications for economists and judges," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1061-1077, June.
    3. Buddelmeyer, Hielke & Powdthavee, Nattavudh, 2016. "Can having internal locus of control insure against negative shocks? Psychological evidence from panel data," Journal of Economic Behavior & Organization, Elsevier, vol. 122(C), pages 88-109.
    4. Arthur Grimes & Sean Hyland, 2015. "A New Cross-Country Measure of Material Wellbeing and Inequality: Methodology, Construction and Results," Working Papers 15_09, Motu Economic and Public Policy Research.
    5. Senik, Claudia, 2008. "Is man doomed to progress?," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 140-152, October.
    6. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2006. "Income and happiness: Evidence, explanations and economic implications," PSE Working Papers halshs-00590436, HAL.
    7. Francesco Ferrante, 2009. "Education, Aspirations and Life Satisfaction," Kyklos, Wiley Blackwell, vol. 62(4), pages 542-562, November.
    8. Konow, James & Earley, Joseph, 2008. "The Hedonistic Paradox: Is homo economicus happier," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 1-33, February.
    9. Konow, James, 2010. "Mixed feelings: Theories of and evidence on giving," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 279-297, April.
    10. Stutzer, Alois & Frey, Bruno S., 2012. "Recent Developments in the Economics of Happiness: A Selective Overview," IZA Discussion Papers 7078, Institute of Labor Economics (IZA).
    11. Powdthavee, Nattavudh, 2009. "What happens to people before and after disability? Focusing effects, lead effects, and adaptation in different areas of life," Social Science & Medicine, Elsevier, vol. 69(12), pages 1834-1844, December.
    12. Powdthavee, Nattavudh, 2014. "What childhood characteristics predict psychological resilience to economic shocks in adulthood?," Journal of Economic Psychology, Elsevier, vol. 45(C), pages 84-101.
    13. Frijters, Paul & Johnston, David W. & Shields, Michael A., 2008. "Happiness Dynamics with Quarterly Life Event Data," IZA Discussion Papers 3604, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Adaptation ; wellbeing ; evolution ; happiness ; habituation;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise

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