Happiness Dynamics, Reference Dependence, and Motivated Beliefs in U.S. Presidential Elections

112 Pages Posted: 29 Jan 2024 Last revised: 25 Aug 2024

See all articles by Miles S. Kimball

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)

Collin Raymond

Purdue University; Cornell SC Johnson College of Business

Jiannan Zhou

Shandong University - School of Economics

Junya Zhou

University of Texas at Dallas - Naveen Jindal School of Management

Fumio Ohtake

Osaka University

Yoshiro Tsutsui

Kyoto Bunkyo University

Date Written: January 2024

Abstract

Collecting and analyzing panel data over the last four U.S. presidential elections, we study the drivers of self-reported happiness. We relate our empirical findings to existing models of elation, reference dependence, and belief formation. In addition to corroborating previous findings in the literature (hedonic asymmetry/hedonic loss aversion, hedonic adaptation and motivated beliefs), we provide novel results that extend the literature in four dimensions. First, happiness responds to changes relative to both the political status quo (i.e., the incumbent presidential party) and the expected electoral outcome, providing support for two major hypotheses regarding reference point formation. Individuals exhibit hedonic loss aversion to deviations from expectations, but hedonic loss neutrality to changes from the status quo. Second, the speed of hedonic adaptation to deviations from the status quo is significantly slower than the speed of hedonic adaptation to surprises. Third, expectations affect happiness in a nonlinear way, consistent with Gul’s model of disappointment aversion, but contrary to other influential reference-dependent models. Fourth, both “objective” and motivated subjective beliefs matter for the happiness reactions, although subjective beliefs matter more.

Suggested Citation

Kimball, Miles S. and Raymond, Collin and Zhou, Jiannan and Zhou, Junya and Ohtake, Fumio and Tsutsui, Yoshiro, Happiness Dynamics, Reference Dependence, and Motivated Beliefs in U.S. Presidential Elections (January 2024). NBER Working Paper No. w32078, Available at SSRN: https://ssrn.com/abstract=4709132

Miles S. Kimball (Contact Author)

University of Colorado Boulder ( email )

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Boulder, CO 80309
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303.492.8960 (Fax)

HOME PAGE: http://www.colorado.edu/Economics/people/faculty/kimball.html

University of Michigan at Ann Arbor - Department of Economics ( email )

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Center for Economic and Social Research, USC ( email )

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National Bureau of Economic Research (NBER)

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Collin Raymond

Purdue University ( email )

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West Lafayette, IN 47907
United States

Cornell SC Johnson College of Business ( email )

Ithaca, NY 14850
United States

Jiannan Zhou

Shandong University - School of Economics ( email )

School of Economics, Shandong University
No. 27 Shanda Nanlu
Jinan, Shandong 250100
China

Junya Zhou

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Fumio Ohtake

Osaka University ( email )

1-1 Yamadaoka
Suita
Osaka, 565-0871
Japan

Yoshiro Tsutsui

Kyoto Bunkyo University ( email )

Uji, 611-0041
Japan

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