“De Gustibus Errari (pot)Est”: Utility Misprediction, Preferences for Well-being and Life Satisfaction

Leonardo Becchetti and Pierluigi Conzo

No 327, CEIS Research Paper from Tor Vergata University, CEIS

Abstract: The life satisfaction literature generally focuses on how life events affect subjective well-being. Through a contingent valuation survey we test whether well-being preferences have significant impact on life satisfaction. A sample of respondents is asked to simulate a policymaker decision consisting in allocating scarce financial resources among 11 well-being domains. Consistently with the utility misprediction hypothesis, we find that the willingness to invest more in the economic well-being domain is negatively correlated with life satisfaction. Our findings are shown to be robust when we account for unobservables related to economic fragility and non-random sample selection. Reverse causality and omitted variable bias are controlled for with instrumental variables and a sensitivity analysis on departures from exogeneity assumptions. Subsample estimates document that the less educated are more affected by the problem.

Keywords: life satisfaction; well-being preferences; utility misprediction; subjective well-being (search for similar items in EconPapers)
JEL-codes: A13 D64 H50 I31 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2014-08-08, Revised 2014-08-08
New Economics Papers: this item is included in nep-hap, nep-ltv and nep-upt
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Related works:
Journal Article: Preferences for Well-Being and Life Satisfaction (2018)
Working Paper: The gustibus errari (pot)est”:utility misprediction, preferences for well-being and life satisfaction" (2014)
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