Characterizing the Choice Environment: Feeling Constrained as an Impediment to Happiness
College of William and Mary - Mason School of Business
February 22, 2013
International Journal of Happiness and Development, Vol. 1, No. 3, pp. 261–273, 2013
We posit that feeling constrained impedes happiness. Under this view, utility and happiness maximization yield the same optimal choices in a variety of standard economic decision problems, but utility and happiness can move in opposite directions in response to exogenous shocks. Our theory (i) respects economists' and psychologists' notions of utility and happiness; (ii) captures why the two concepts are often confused; (iii) explains the Easterlin Paradox and hedonic adaptation without resorting to systematically poor choices; and (iv) offers a novel interpretation of previous empirical findings in which individuals' choices go hand-in-hand with lower happiness.
Number of Pages in PDF File: 19
Keywords: behavioral choice, constraint, contentment, decision theory, happiness, rational choice, satisfaction, shadow value, utility, welfare, well-being
JEL Classification: A10, A12, D11, D60, E21, I31, J22, O40
Date posted: February 24, 2013 ; Last revised: December 1, 2013
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