Happiness, Freedom and Control
World Bank - Poverty Reduction and Economic Management Network (PRMVP); University of Turin - Department of Economics
July 3, 2009
Università Commerciale Luigi Bocconi, Econpubblica Centre for Research on the Public Sector, Working Paper No. 141
Does freedom of choice have an intrinsic value for people and how do people value freedom of choice? Drawing on economics and social psychology the paper provides a theory and empirical evidence of how individuals may value freedom of choice and derive utility from it. It is argued that the degree of control that we think we have over choice regulates how we value freedom of choice and that each individual faces a freedom "threshold" beyond which more freedom turns into disustility. We find strong evidence in support of this hypothesis. Making use of a combination of all rounds of the World and European Values Surveys we find a variable that measures freedom and control to be the best predictor of life satisfaction worldwide. This variable predicts life satisfaction better than any other known factors such as employment, income or marriage in every country ad across countries. A test that this variable is not a proxy of life satisfaction and that measures well both freedom and control. The implications of this finding for economics range from utility and choice theory to public policies.
Number of Pages in PDF File: 25
Keywords: Happiness, Freedom, Control, Personality
JEL Classification: I31, Z1
Date posted: November 4, 2009
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