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

Benjamin, Daniel J.; Heffetz, Ori; Kimball, Miles S.; Rees-Jones, Alex

doi:10.2139/ssrn.2221538

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

American Economic Review, Forthcoming

Johnson School Research Paper Series No. 8-2013

43 Pages Posted: 21 Feb 2013 Last revised: 27 Feb 2014

See all articles by Daniel J. Benjamin

Daniel J. Benjamin

Anderson School of Management; Human Genetics Department, David Geffen School of Medicine; National Bureau of Economic Research (NBER)

Ori Heffetz

Cornell University - S.C. Johnson Graduate School of Management; The Hebrew University of Jerusalem - Department of Economics and Center for Rationality; National Bureau of Economic Research (NBER)

Miles S. Kimball

University of Colorado Boulder; University of Michigan at Ann Arbor - Department of Economics; Center for Economic and Social Research, USC; National Bureau of Economic Research (NBER)

Alex Rees-Jones

Cornell University - Department of Economics; National Bureau of Economic Research (NBER)

There are 2 versions of this paper

Date Written: February 25, 2014

Abstract

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’s 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.

Keywords: happiness, life satisfaction, subjective well-being, preference, utility, revealed preference, marginal rate of substitution

JEL Classification: C81, D03, D69

Suggested Citation: Suggested Citation

Benjamin, Daniel J. and Benjamin, Daniel J. and Heffetz, Ori and Kimball, Miles S. and Rees-Jones, Alex, Can Marginal Rates of Substitution Be Inferred from Happiness Data? Evidence from Residency Choices (February 25, 2014). American Economic Review, Forthcoming, Johnson School Research Paper Series No. 8-2013, Available at SSRN: https://ssrn.com/abstract=2221538 or http://dx.doi.org/10.2139/ssrn.2221538