SWB and utility Flashcards
What is the difference between Happiness Theory and Preference Theory (Harsanyi, 1997)?
Happiness Theory defines utility as subjective well-being or happiness. Preference Theory defines utility as preferences revealed by behaviour, without assuming underlying psychological states.
What is the distinction between cardinal and ordinal utility?
Cardinal utility implies measurable utility allowing interpersonal comparisons. Ordinal utility ranks preferences without assuming measurable differences, sufficient for most economic modelling.
What is experienced utility and how is it different from decision utility?
Experienced utility reflects actual felt well-being, while decision utility reflects preferences inferred from choices. Behavioural economics often reveals a gap between the two.
What research methods are used to measure experienced utility?
Methods include Experience Sampling Method (ESM), Day Reconstruction Method (DRM), and momentary evaluations, capturing real-time or retrospective self-reported well-being.
What does Benjamin et al. (2012) find about the relationship between SWB and choice?
Respondents often do not choose the option that would maximise their self-predicted SWB. SWB is important but not the sole determinant of choice utility.
Why does Harsanyi argue against defining welfare purely as happiness?
He argues this excludes altruistic desires and achievements. People value objective accomplishments and social contributions beyond just personal happiness.
What are some challenges in measuring subjective well-being?
Challenges include interpersonal comparability, bounded scales, priming effects, mood/context bias, social desirability bias, and recall errors.
What are the common patterns found in subjective well-being regressions?
Health, unemployment, bereavement, and social relationships significantly affect SWB. Life satisfaction follows a U-shape over the life-cycle. Education improves evaluative but not affective well-being.
What is the Easterlin Paradox?
It observes that while income is positively correlated with SWB within countries at a given time, rising GDP over time does not necessarily lead to higher average SWB.
How do researchers explain the Easterlin Paradox?
Key explanations include the importance of relative income, rising expectations and social norms, and adaptation to higher income over time.
What do Blanchflower and Oswald (2004) find in their well-being research?
They find a consistent U-shaped life satisfaction curve, with midlife representing the lowest point, robust across countries and datasets.
What do Benjamin et al. (2023) caution about using SWB for policy evaluation?
They argue that SWB and preferences are distinct, and relying solely on SWB data may misrepresent welfare, especially regarding income effects.
