The Half-Life of Happiness: Hedonic Adaptation in the Subjective Well-Being of Poor Slum Dwellers to a Large Improvement in Housing

41 Pages Posted: 20 Apr 2015

See all articles by Sebastian Galiani

Sebastian Galiani

University of Maryland - Department of Economics

Paul J. Gertler

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Raimundo Undurraga

New York University (NYU)

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Date Written: April 2015

Abstract

Subjective well-being may not improve in step with increases in material well-being due to hedonic adaptation, a psychological process that attenuates the long-term emotional impact of a favorable or unfavorable change in circumstances, such that people’s happiness eventually returns to a stable reference level. We use a multi-country field experiment to examine the impact of the provision of improved housing to extremely poor populations on subjective measures of well-being to test whether poor populations exhibit hedonic adaptation when their basic housing needs are met. After sixteen months, we find that subjective perceptions of well-being improve substantially for recipients of better housing but that after, on average, eight additional months, 60% of that gain disappears.

Suggested Citation

Galiani, Sebastian and Gertler, Paul J. and Undurraga, Raimundo, The Half-Life of Happiness: Hedonic Adaptation in the Subjective Well-Being of Poor Slum Dwellers to a Large Improvement in Housing (April 2015). NBER Working Paper No. w21098. Available at SSRN: https://ssrn.com/abstract=2596427

Sebastian Galiani (Contact Author)

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

Paul J. Gertler

University of California, Berkeley - Haas School of Business ( email )

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National Bureau of Economic Research (NBER)

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Raimundo Undurraga

New York University (NYU) ( email )

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United States

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