“Utility and Happiness” + Other Recent Work on the Economics of Happiness at the University of...
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Transcript of “Utility and Happiness” + Other Recent Work on the Economics of Happiness at the University of...
“Utility and Happiness” + Other Recent Work on the
Economics of Happiness at the University of Michigan
Miles Kimball and Robert Willis
Jean-Benoit Rousseau
• First Ph.D. Dissertation in the in the U of M Economics Department entirely on the Economics of Happiness
• Understanding the Easterlin Paradox in the U.S.
• Life Cycle of Happiness for Men and Women
3
Happiness by Income Quintile
Empirics of Hedonic Adaptation• “Dynamics of Happiness after Major Life Events
in the HRS”– Kimball, Ryan Nunn, Dan Silverman
• “Unhappiness After Hurricane Katrina”– Kimball, Helen Levy, Fumio Ohtake, Rousseau, Yoshiro
Tsutsui• “The Dynamics of Happiness: Evidence from Daily
Panel Data”– Kimball, Ohtake, Tsutsui
• Happiness and the 2008 Election – Kimball, Ohtake, Titiunik, Tsutsui
6
“Utility and Happiness” by Miles Kimball and Robert Willis
2 Key Ideas
1.Price-Theoretic Approach to Happiness
2.Elation Theory of Happiness
The Price Theoretic Approach to Happiness:
vt =Et β jU(Xt+ j ,Ht+ j )∑
The Elation Theory of Happiness
Ht=M(Xt) + e(Xt,ιt,ιt−1,...)
ιt = vt − Et −1vt
(Happiness = Baseline Mood + Elation)
(Lifetime Utility Innovation)
Implication of Both Ideas Combined
EITHER• The integral of resulting elation measures the size
of a life-time utility innovation. OR• Preference for happiness will induce departures
from expected utility theory – after substituting the function for happiness into
the utility function, – even though we assumed expected utility over
the ultimate goods (including happiness)
The Price Theoretic Approach to Happiness:
vt =Et β jU(Xt+ j ,Ht+ j )∑
The Elation Theory of Happiness
Ht=M(Xt) + e(Xt,ιt,ιt−1,...)
ιt = vt − Et −1vt