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Deconstructing the Hedonic Treadmill: Is Happiness Autoregressive?

37 Pages Posted: 3 Sep 2008 Last revised: 23 Apr 2011

Nicolas L. Bottan

University of Illinois at Urbana-Champaign

Ricardo Perez-Truglia

University of California, Los Angeles (UCLA)

Date Written: October 1, 2009

Abstract

Affective habituation is well-documented in social sciences: people seem to adapt to many life events, ranging from lottery windfalls to terminal illnesses. A group of studies have tried to measure habituation by seeing how lagged values of life events affect present happiness. We propose an additional adaptation channel: current happiness may depend directly on past happiness, which amounts to assessing whether happiness is autoregressive. We run dynamic happiness regressions using individual-level panel data from the four large household panels. As in previous studies, the coefficients on lagged events (e.g., becoming unemployed, getting married) suggest habituation. However, all the econometric models suggest that the coefficient on lagged happiness is positive and significant. We discuss whether this may be evidence of happiness having an inertial force (besides the usual habituation channel).

Keywords: happiness, autoregressive, adaptation, dynamic panel

JEL Classification: D0, I31

Suggested Citation

Bottan, Nicolas L. and Perez-Truglia, Ricardo, Deconstructing the Hedonic Treadmill: Is Happiness Autoregressive? (October 1, 2009). Available at SSRN: https://ssrn.com/abstract=1262569 or http://dx.doi.org/10.2139/ssrn.1262569

Nicolas Bottan

University of Illinois at Urbana-Champaign ( email )

Champaign, IL
United States

HOME PAGE: http://publish.illinois.edu/nicolasbottan/

Ricardo Perez-Truglia (Contact Author)

University of California, Los Angeles (UCLA) ( email )

405 Hilgard Avenue
Box 951361
Los Angeles, CA 90095
United States

HOME PAGE: http://www.anderson.ucla.edu/faculty/global-economics-and-management/perez-truglia

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