CiteULike: mpromber's economics

Back to Bentham? Explorations of Experienced Utility

Daniel Kahneman — 2008-07-23T12:31:35-00:00

The Quarterly Journal of Economics, Vol. 112, No. 2. (1997), pp. 375-405.

Two core meanings of “utility” are distinguished. “Decision utility” is the weight of an outcome in a decision. “Experienced utility” is hedonic quality, as in Bentham's usage. Experienced utility can be reported in real time (instant utility), or in retrospective evaluations of past episodes (remembered utility). Psychological research has documented systematic errors in retrospective evaluations, which can induce a preference for dominated options. We propose a formal normative theory of the total experienced utility of temporally extended outcomes. Measuring the experienced utility of outcomes permits tests of utility maximization and opens other lines of empirical research.

Valuing public goods: The purchase of moral satisfaction

Daniel Kahneman — 2008-07-15T09:52:48-00:00

Journal of Environmental Economics and Management, Vol. 22, No. 1. (January 1992), pp. 57-70.

Contingent valuation surveys in which respondents state their willingness to pay (WTP) for public goods are coming into use in cost-benefit analyses and in litigation over environmental losses. The validity of the method is brought into question by several experimental observations. An embedding effect is demonstrated, in which WTP for a good varies depending on whether it is evaluated on its own or as part of a more inclusive category. The ordering of various public issues by WTP is predicted with significant accuracy by independent ratings of the moral satisfaction associated with contributions to these causes. Contingent valuation responses reflect the willingness to pay for the moral satisfaction of contributing to public goods, not the economic value of these goods.

Income and happiness: Towards a unified theory

Richard Easterlin — 2008-06-10T17:36:09-00:00

Economic Journal, Vol. 111, No. 473. (2001), pp. 465-484.

The globalization of human development

Richard Easterlin — 2008-06-10T17:36:09-00:00

Annals of the American Academy of Political and Social Science, Vol. 570, No. 0. (2000), pp. 32-48.

Is reported happiness five years ago comparable to present happiness? A cautionary note

Richard Easterlin — 2008-06-10T17:36:09-00:00

Journal of Happiness Studies, Vol. 3, No. 2. (2002), pp. 193-198.

A puzzle for adaptive theory

Richard Easterlin — 2008-06-10T17:36:09-00:00

Journal of Economic Behavior and Organization, Vol. 56, No. 4. (2005), pp. 513-521.

Over the life cycle aspirations for material goods grow commensurately with consumer wealth. But aspirations for marriage and the number and “quality” of children do not change much. The puzzle is why there is this difference between life domains in the extent to which aspirations adapt to actual circumstances. The findings come from a cohort analysis of 1978 and 1994 survey responses on the good life.

Will raising the incomes of all increase the happiness of all?

RA Easterlin — 2008-06-10T17:36:09-00:00

Journal of Economic Behavior and Organization, Vol. 27, No. 1. (1995), pp. 35-47.

Today, as in the past, within a country at a given time those with higher incomes are, on average, happier. However, raising the incomes of all does not increase the happiness of all. This is because the material norms on which judgments of well-being are based increase in the same proportion as the actual income of the society. These conclusions are suggested by data on reported happiness, material norms, and income collected in surveys in a number of countries over the past half century.

What Can Economists Learn from Happiness Research?

Bruno Frey — 2008-04-01T14:14:21-00:00

Journal of Economic Literature, Vol. 40, No. 2. (2002), pp. 402-435.

Medium maximization

C Hsee — 2007-12-27T10:05:33-00:00

Journal of Consumer Research, Vol. 30, No. 1. (2003), pp. 1-14.

A medium--for example, points or money--is a token people receive as the immediate reward of their effort. It has no value in and of itself, but it can be traded for a desired outcome. Experiments demonstrate that, when people are faced with options entailing different outcomes, the presence of a medium can alter what option they choose. This effect occurs because the medium presents an illusion of advantage to an otherwise not so advantageous option, an illusion of certainty to an otherwise uncertain option, or an illusion of linearity to an otherwise concave effort-outcome return relationship. This work has implications for how points influence consumer choice and how money influences human behavior.

Walking the hedonic product treadmill: Default contrast and mood-based assimilation in judgements of predicted happiness with a target product.

Rajagopal Raghunathan — 2007-07-10T12:28:34-00:00

Journal of Consumer Research, Vol. 28 (2001), pp. 355-368.

Response Mode Effects and Moral Values

Julie Irwin — 2007-07-10T12:23:13-00:00

Organizational Behavior and Human Decision Processes, Vol. 84, No. 2. (March 2001), pp. 177-197.

In five studies, we measured the extent to which subjects weight moral product attributes in different response modes. We found that nonprice judgments such as likelihood of purchase ratings were more reflective of expressed moral attitudes than were pricing responses, and that holistic price evaluations were especially unlikely to reflect moral considerations. Post-task ratings confirmed the preference results, as did an experiment controlling for the influence of task goals. Our results have implications for compatibility theories of preference elicitation, the predictability of respondent ratings of attribute unacceptability, and the measurement of utilities for morally charged attributes.

Money, Consumption and Happiness

Christopher Hsee — 2007-07-10T12:12:22-00:00

(20 May 2007)

Prospect theory: An analysis of decision under risk

Daniel Kahneman — 2007-06-18T10:01:51-00:00

Econometrica, Vol. 47 (1979), pp. 263-292.

Self-Determination Theory and Public Policy: Improving the Quality of Consumer Decisions Without Using Coercion

Arlen Moller — 2007-06-15T20:26:20-00:00

Journal of Public Policy and Marketing, Vol. 25 (2006), pp. 104-116.

The article discusses self-determination theory and its effects on public policy, specifically the ways it can improve the quality of consumer decisions without using coercion. Self-determination theory suggest humans have a basic psychological need for autonomy in order to self-regulate and maintain well-being. Policies that promote autonomous choices to instigate behavior changes are often more effective than the use of coercion, particularly when utilizing a large sample group over a long period of time.

The dark side of choice: When choice impedes social welfare

Simona Botti — 2007-06-15T20:21:19-00:00

Journal of Public Policy and Marketing, Vol. 25 (2006), pp. 24-38.

Rationality and Bounded Rationality,

Robert Aumann — 2006-05-16T07:50:10-00:00

Games and Economic Behavior, Vol. 21, No. 1-2. (October 1997), pp. 2-14.

Experimental practices in economics: A challenge for psychologists?

Ralph Hertwig — 2007-06-14T15:38:38-00:00

Behavioral and Brain Sciences, Vol. 24 (2001), pp. 383-451.

Abstract: This target article is concerned with the implications of the surprisingly different experimental practices in economics and in areas of psychology relevant to both economists and psychologists, such as behavioral decision making. We consider four features of ex- perimentation in economics, namely, script enactment, repeated trials, performance-based monetary payments, and the proscription against deception, and compare them to experimental practices in psychology, primarily in the area of behavioral decision making. Whereas economists bring a precisely defined “script” to experiments for participants to enact, psychologists often do not provide such a script, leaving participants to infer what choices the situation affords. By often using repeated experimental trials, economists allow participants to learn about the task and the environment; psychologists typically do not. Economists generally pay participants on the ba- sis of clearly defined performance criteria; psychologists usually pay a flat fee or grant a fixed amount of course credit. Economists vir- tually never deceive participants; psychologists, especially in some areas of inquiry, often do. We argue that experimental standards in economics are regulatory in that they allow for little variation between the experimental practices of individual researchers. The exper- imental standards in psychology, by contrast, are comparatively laissez-faire. We believe that the wider range of experimental practices in psychology reflects a lack of procedural regularity that may contribute to the variability of empirical findings in the research fields un- der consideration. We conclude with a call for more research on the consequences of methodological preferences, such as the use on monetary payments, and propose a “do-it-both-ways” rule regarding the enactment of scripts, repetition of trials, and performance-based monetary payments. We also argue, on pragmatic grounds, that the default practice should be not to deceive participants.

Utility, informed preference, or happiness: Following Harsanyi's argument to its logical conclusion

Yew Ng — 2007-06-11T13:22:48-00:00

Social Choice and Welfare, Vol. 16, No. 2. (1999), pp. 197-216.

Harsanyi (1997) argues that, for normative issues, informed preferences should be used, instead of actual preferences or happiness (or welfare). Following his argument allowing him to move from actual to informed preferences to its logical conclusion forces us to use happiness instead. Where informed preferences differ from happiness due to a pure concern for the welfare of others, using the former involves multiple counting. This “concerning effect” (non-affective altruism) differs from and could be on top of the “minding effect” (affective altruism) of being happy seeing or helping others to be happy. The concerning/minding effect should be excluded/included in social decision. Non-affective altruism is shown to exist in a compelling hypothetical example. Just as actual preferences should be discounted due to the effects of ignorance and spurious preferences, informed preferences should also be discounted due to some inborn or acquired tendencies to be irrational, such as placing insufficient weights on the welfare of the future, maximizing our biological fitness instead of our welfare. Harsanyi's old result on utilitarianism is however defended against

Does watching TV make us happy?

Bruno Frey — 2007-06-01T01:46:01-00:00

Journal of Economic Psychology, Vol. 28, No. 3. (June 2007), pp. 283-313.

Watching TV is a major human activity. Because of its immediate benefits at negligible immediate marginal costs it is for many people tempting to view TV rather than to pursue more engaging activities. As a consequence, individuals with incomplete control over, and foresight into, their own behavior watch more TV than they consider optimal for themselves and their well-being is lower than what could be achieved. We find that heavy TV viewers, and in particular those with significant opportunity cost of time, report lower life satisfaction. Long TV hours are also linked to higher material aspirations and anxiety.