Money, Happiness, and Aspirations: An Experimental Study

Michael McBride ()

No 60721, Working Papers from University of California-Irvine, Department of Economics

Abstract: The past decade has witnessed an explosion of interest in the scientific study of happiness. Economists, in particular, find that happiness increases in income but decreases in income aspirations, and this work prompts examination of how aspirations form and adapt over time. This paper presents results from the first experimental study of how multiple factors -- past payments, social comparisons, and expectations -- influence aspiration formation and reported satisfaction. I find that expectations and social comparisons significantly affect reported satisfaction, and that subjects care relatively more about social comparisons once they have achieved a satisfactory outcome. These findings support an aspirations-based theory of happiness.

Keywords: Satisfaction; Happiness; Adaptation; Experiment (search for similar items in EconPapers)
JEL-codes: C91 I31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-hap, nep-hpe and nep-soc
Date: 2007-03, Revised 2008-07
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Persistent link: http://EconPapers.repec.org/RePEc:irv:wpaper:060721

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