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What Happiness Research Can Tell Us About Self-Control Problems And Utility Misprediction

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  • Alois Stutzer
  • Bruno S. Frey

Abstract

Neoclassical economic theory rules out systematic errors in consumption choice. According to the basic view, individuals know what they choose. They are able to predict how much utility an activity or a good produces for them now and in the future and they can maximize their utility. This implies that behavior reveals consistent preferences. This approach makes it impossible to detect and understand sub-optimal consumption decisions, due to problems of self-control and the misprediction of utility. We propose the economics of happiness as a methodological approach to study these phenomena. Based on proxy measures for experienced utility, it is, in principle, possible to directly address whether some observed behavior is sub-optimal and is therefore reducing a person�s well-being. We discuss recent evidence on smoking and eating habits, TV viewing and commuting choice.

Suggested Citation

  • Alois Stutzer & Bruno S. Frey, 2006. "What Happiness Research Can Tell Us About Self-Control Problems And Utility Misprediction," IEW - Working Papers 267, Institute for Empirical Research in Economics - University of Zurich.
  • Handle: RePEc:zur:iewwpx:267
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    File URL: http://www.econ.uzh.ch/static/wp_iew/iewwp267.pdf
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    References listed on IDEAS

    as
    1. B. Douglas Bernheim & Antonio Rangel, 2004. "Addiction and Cue-Triggered Decision Processes," American Economic Review, American Economic Association, vol. 94(5), pages 1558-1590, December.
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    Cited by:

    1. Bruno S. Frey & Susanne Neckermann, 2008. "Academics Appreciate Awards. A New Aspect of Incentives in Research," CREMA Working Paper Series 2008-32, Center for Research in Economics, Management and the Arts (CREMA).
    2. Christian Schubert, 2012. "Is novelty always a good thing? Towards an evolutionary welfare economics," Journal of Evolutionary Economics, Springer, vol. 22(3), pages 585-619, July.
    3. Stefan Borsky & Paul A. Raschky, 2009. "The Hedonics of Hedonism - Estimating the Value of Risk-Taking Activities," Kyklos, Wiley Blackwell, vol. 62(2), pages 210-225, April.
    4. Wirl Franz & Novak Andreas J. & Hof Franz X., 2008. "Happiness due to Consumption and its Increases, Wealth and Status," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 12(4), pages 1-34, December.
    5. Pullinger, Martin, 2014. "Working time reduction policy in a sustainable economy: Criteria and options for its design," Ecological Economics, Elsevier, vol. 103(C), pages 11-19.
    6. Neckermann, Susanne & Frey, Bruno S., 2013. "And the winner is…? The motivating power of employee awards," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 46(C), pages 66-77.

    More about this item

    Keywords

    adaptation; individual decision-making; revealed preference; self-control; subjective well-being; utility misprediction;

    JEL classification:

    • D00 - Microeconomics - - General - - - General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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