(Mis-)Predicted Subjective Well-Being Following Life Events

Reto Odermatt and Alois Stutzer

No 9252, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The correct prediction of how alternative states of the world affect our lives is a cornerstone of economics. We study how accurate people are in predicting their future well-being when facing major life events. Based on individual panel data, we compare people's forecast of their life satisfaction in five years' time to their actual realisations later on. This is done after the individuals experience widowhood, marriage, unemployment or disability. We find systematic prediction errors that are at least partly driven by unforeseen adaptation.

Keywords: adaptation; life satisfaction; life events; projection-bias; subjective well-being; utility prediction; unemployment (search for similar items in EconPapers)
JEL-codes: D03 D12 D60 I31 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2015-08
New Economics Papers: this item is included in nep-for, nep-hap, nep-ltv, nep-neu and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

Published - revised version published in: Journal of the European Economic Association, 2019, 17 (1), 245–283

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Related works:
Journal Article: (Mis-)Predicted Subjective Well-Being Following Life Events (2019)
Working Paper: (Mis-)Predicted Subjective Well-Being Following Life Events (2017)
Working Paper: (Mis-)Predicted Subjective Well-Being Following Life Events (2015)
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