Characterizing the Choice Environment: Feeling Constrained as an Impediment to Happiness

International Journal of Happiness and Development, Vol. 1, No. 3, pp. 261–273, 2013

19 Pages Posted: 24 Feb 2013 Last revised: 1 Dec 2013

Katherine Guthrie

College of William and Mary - Mason School of Business

Jan Sokolowsky

Independent

Date Written: February 22, 2013

Abstract

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.

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

Suggested Citation

Guthrie, Katherine and Sokolowsky, Jan, Characterizing the Choice Environment: Feeling Constrained as an Impediment to Happiness (February 22, 2013). International Journal of Happiness and Development, Vol. 1, No. 3, pp. 261–273, 2013. Available at SSRN: https://ssrn.com/abstract=2222923 or http://dx.doi.org/10.2139/ssrn.2222923

Katherine Guthrie

College of William and Mary - Mason School of Business ( email )

P.O. Box 8795
Williamsburg, VA 23187-8795
United States
7572212832 (Phone)

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