Can Marginal Rates of Substitution Be Inferred from Happiness Data? Evidence from Residency Choices

We survey 561 students from U.S. medical schools shortly after they submit choice rankings over residencies to the National Resident Matching Program. We elicit (a) these choice rankings, (b) anticipated subjective well-being (SWB) rankings, and (c) expected features of the residencies (such as prestige). We find substantial differences between choice and anticipated-SWB rankings in the implied tradeoffs between residency features. In our data, evaluative SWB measures (life satisfaction and Cantril\u27s ladder) imply tradeoffs closer to choice than does affective happiness (even time-integrated), and as close as do multi-measure SWB indices. We discuss implications for using SWB data in applied work

Value Commitment, Resolute Choice, and the Normative Foundations of Behavioural Welfare Economics

Given the endowment effect, the role of attention in decision-making, and the framing effect, most behavioral economists agree that it would be a mistake to accept the satisfaction of revealed preferences as the normative criterion of choice. Some have suggested that what makes agents better off is not the satisfaction of revealed preferences, but ‘true’ preferences, which may not always be observed through choice. While such preferences may appear to be an improvement over revealed preferences, some philosophers of economics have argued that they face insurmountable epistemological, normative, and methodological challenges. This article introduces a new kind of true preference – values-based preferences – that blunts these challenges. Agents express values-based preferences when they choose in a manner that is compatible with a consumption plan grounded in a value commitment that is normative, affective, and stable for the agent who has one. Agents who choose according to their plans are resolute choosers. My claim is that while values-based preferences do not apply to every choice situation, this kind of preference provides a rigorous way for thinking about classic choice situations that have long interested behavioral economists and philosophers of economics, such as ‘Joe-in-the-cafeteria.

Cognitive Economics

Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/111774/1/jere12070.pd

An Experimental Investigation of Preference Misrepresentation in the Residency Match

The development and deployment of matching procedures that incentivize truthful preference reporting is considered one of the major successes of market design research. In this study, we test the degree to which these procedures succeed in eliminating preference misrepresentation. We administered an online experiment to 1,714 medical students immediately after their participation in the medical residency match--a leading field application of strategy-proof market design. When placed in an analogous, incentivized matching task, we find that 23% of participants misrepresent their preferences. We explore the factors that predict preference misrepresentation, including cognitive ability, strategic positioning, overconfidence, expectations, advice, and trust. We discuss the implications of this behavior for the design of allocation mechanisms and the social welfare in markets that use them

Is Well-being Measurable after All?

In Valuing Health, Dan Hausman argues that well-being is not measurable, at least not in the way that science and policy would require. His argument depends on a demanding conception of well-being and on a pessimistic verdict upon the existing measures of subjective well-being. Neither of these reasons, I argue, warrant as much skepticism as Hausman professes

The effect of the Brexit referendum result on subjective well-being*

We study the effect of the Brexit referendum result on subjective well-being in the United Kingdom. Using a quasi-experimental design, we find that the referendum’s outcome led to an overall decrease in subjective well-being in the United Kingdom compared to a control group. The effect is driven by individuals who hold an overall positive image of the European Union and shows little signs of adaptation during the Brexit transition period. Economic expectations are potential mechanisms of this effect

Happiness, Life Satisfaction, Well-being: Survey Design and Response Analysis

Several well-established surveys ask questions in order to measure subjective well-being. In some questionnaires, questions relate to happiness, in others, to individual well-being or satisfaction or to both happiness and satisfaction. In the literature of happiness, several papers have compared responses to these questions using available national and international data. However, employed data sets make it hard to properly disentangle wordings or scale effects from other survey design or survey administration effects. For this reason, we design a single ad hoc survey in which we ask the same respondents to answer more than one well-being question. In addition, we use standardized scales across questions. We show that wording clearly matters: each subject self-reports her/his own happiness, life satisfaction, and well-being differently. We found that subjects do not perceive themselves as equivalent to one another and their determinants turn out to be different. Moreover, we find that the use of different scales leads to different results. However, the coefficients of the determinants across different notions of welfare and across different scales never reverse the sign

Creative destruction and subjective well-being

In this paper we analyze the relationship between turnover-driven growth and subjective well-being. Our model of innovation-led growth and unemployment predicts that: (i) the effect of creative destruction on expected individual welfare should be unambiguously positive if we control for unemployment, less so if we do not; (ii) job creation has a positive and job destruction has a negative impact on well-being; (iii) job destruction has a less negative impact in areas with more generous unemployment insurance policies; and (iv) job creation has a more positive effect on individuals that are more forward-looking. The empirical analysis using cross sectional MSA (metropolitan statistical area)-level and individual-level data provide empirical support to these predictions