Hostname: page-component-8448b6f56d-wq2xx Total loading time: 0 Render date: 2024-04-23T11:53:31.370Z Has data issue: false hasContentIssue false
  • English
  • Français

Unequal Life Chances and Choices: How Subjective Well-Being Metrics Can Inform Benefit-Cost Analysis

Published online by Cambridge University Press:  28 January 2016

Carol Graham
Get access Rights & Permissions [Opens in a new window]

Abstract

Individuals who are compromised in their ability to either believe in or plan for their future will make very different valuations of future benefits than will those who have more means and capabilities. These valuations could apply across a wide spectrum, from health care and insurance to investments in education to retirement savings. Data based on time trade-offs and other hypothetical questions will lead to large gaps in contingency valuations which, taken at face value, would lead to regressive outcomes. Individuals who discount the future are unlikely to be responsive to information intended to mitigate risk or to nudges designed to guide behavior away from risky choices. For example, these differential responses result in particular preventive policies having much less than the intended benefit values. Subjective well-being metrics can help circumvent the problem by comparing the reported well-being of individuals who are actually in different arrangements, such as those who have taken up health insurance or not, or in different work arrangements. Still, subjective well-being metrics are a compliment and not a substitute for the standard data that is used in BCA.

Keywords

H42m I14I39J17Behavioralcontingency valuationsdiscount rateshealthother social policiesriskrisk and uncertaintysubjective well-being
Type
Articles
Information
Journal of Benefit-Cost Analysis , Volume 7 , Issue 1: Special Issue on [Ir]rationality, Happiness, and Benefit-Cost Analysis , Spring 2016 , pp. 121 - 146
Copyright
© Society for Benefit-Cost Analysis 2016 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Adler, Matthew, Dolan, Paul & Kavetsos, Georgio(2014). Understanding Life Choices: Happiness or Something Else. Mimeo, London School of Economics.Google Scholar
Barofsky, Jeremy(2015). Barriers to Medicaid Coverage after ACA Expansion: Information, Behavior, and Perceptions. Presentation to the Brookings-USC Conference on Health and Well-Being, Los Angeles, February.Google Scholar
Benabou, Roland & Tirole, Jean (2003). Intrinsic and Extrinsic Motivation. Review of Economic Studies, 70(70), 489–520.CrossRefGoogle Scholar
Benjamin, Daniel J., Heffetz, Ori, Kimball, Miles & Rees-Jones, Alex (2012). What Do You Think Would Make You Happier? What Do You Think You Would Choose? American Economic Review, 102(5), 2083–2110.Google Scholar
Blanchflower, David, Oswald, Andrew & Stewart-Brown, Sarah (2013). Is Psychological Well-being Linked to the Consumption of Fruits and Vegetables? Social Indicators Research, 114, 788–801.Google Scholar
Blow, Charles(2014). Poverty is Not a State of Mind. The New York Times, May 19.Google Scholar
Boehm, Julia & Kubzansky, Laura (2012). The Heart’s Content: The Association Between Positive Psychological Well-Being and Cardiovascular Health. Psychological Bulletin, 138, 655–691.Google Scholar
Chetty, Raj (2015). Behavioral Economics and Public Policy: A Pragmatic Perspective – Richard T. Ely Lecture. American Economic Review, 105(5), 1–33.Google Scholar
Davidson, Karina, Mostofsky, Elizabeth & Whang, William (2010). Don’t Worry, Be Happy: Positive Affect and a Reduced 10-Year Incident of Coronary Heart Disease. European Heart Journal, 31, 1065–1070.Google Scholar
De Neve, Jan-Emmanuel & Oswald, Andrew (2012). Estimating the Effects of Life Satisfaction and Positive Affect on Later Outcomes Using Sibling Data. Proceedings of the National Academies of Sciences, 109(49), 19953–19958.Google Scholar
De Neves, Jan-Emmanuel, Diener, Ed, Tay, L. & Xuereb, C. (2013). The Objective Benefits of Subjective Well-Being. In Helliwell, John, Layard, Richard & Sachs, Jeffrey (Eds.), World Happiness Report II. New York: The Earth Institute.Google Scholar
Easterlin, Richard A., Morgan, Robson, Switek, Malgorzata & Wang, Fei (2012). China’s Life Satisfaction, 1990–2010. Proceedings of the National Academy of Sciences, 109(25), 9775–9780.CrossRefGoogle ScholarPubMed
Frey, Bruno, Benesch, Christine & Stutzer, Alois (2007). Does Watching TV Make Us Happy? Journal of Economic Psychology, 28(3), 283–313.Google Scholar
Goudie, Robert, Mukerjee, Sach, De Neve, Jan-Emmanuel, Oswald, Andrew & Wu, Stephen (2014). Happiness as a Driver of Risk-Avoiding Behavior: A Conceptual Framework with an Application to Seat-Belt Wearing and Automobile Accidents. Economica, 81(324), 674–679.Google Scholar
Graham, Carol (2008). Happiness and Health: Lessons – and Questions – For Policy. Health Affairs, 27(1), 72–87.CrossRefGoogle ScholarPubMed
Graham, Carol (2011). Adaptation amidst Prosperity and Adversity: Some Insights from Happiness Surveys from around the World. World Bank Research Observer, 26(1), 105–137.CrossRefGoogle Scholar
Graham, Carol(2014). America: Divided in the Pursuit of Happiness. Social Mobility Memos, The Brookings Institution, September 2: http://www.brookings.edu/blogs/social-mobility-memos/posts/2014/09/02-wellbeing-inequality-american-dream-graham.Google Scholar
Graham, Carol(forthcoming). Happiness for All? Unequal Lives, Unequal Hopes, and the American Dream. Princeton: Princeton University Press.Google Scholar
Graham, Carol, Eggers, Andrew & Sukhtankar, Sandip (2004). Does Happiness Pay: An Initial Exploration Based on Panel Data from Russia. Journal of Economic Behavior and Organization, 55, 319–342.Google Scholar
Graham, Carol, Higuera, Lucas & Lora, Eduardo (2011). Which Health Conditions Cause the Most Unhappiness? Health Economics, 20(12), 1431–1447.Google Scholar
Graham, Carol & Lora, Eduardo(Eds.) (2009). Paradox and Perception: Measuring Quality of Life in Latin America. Washington, D.C.: The Brookings Institution Press.Google Scholar
Graham, Carol & Nikolova, Milena(2015). Bentham or Aristotle in the Development Process? An Empirical Investigation of Capabilities and Subjective Well-Being. World Development (April).Google Scholar
Graham, Carol & Pettinato, Stefano (2002). Frustrated Achievers: Winners, Losers, and Subjective Well-Being in New Market Economies. Journal of Development Studies, 38(4), 100–140.Google Scholar
Gruber, Jonathan & Mullainathan, Sendhil (2005). Do Cigarette Taxes Make Smokers Happier? BE Journal of Economic Analysis and Policy: Advances in Economic Analysis and Policy, 5(1), 1–43.Google Scholar
Guven, C. (2012). Reversing the Question: Does Happiness Affect Consumption and Saving Behavior? Journal of Economic Psychology, 33(4), 707–717.Google Scholar
Hammitt, James K. (2013). Positive versus Normative Justifications for Benefit-Cost Analysis: Implications for Interpretation and Policy. Review of Environmental Economics and Policy, 7(2), 199–218.Google Scholar
Haushofer, Johannes & Fehr, Ernst (2014). On the Psychology of Poverty. Science, 344(6186, May), 862–867.Google Scholar
Ifcher, John & Zarghamee, Homa (2011). Happiness and Time Preference: The Effect of Positive Affect in a Random-Assignment Experiment. American Economic Review, 101(December), 3109–3129.Google Scholar
Isen, Alice (2000). Positive Affect and Decision-making. In Lewis, M. & Haviland, J. M. (Eds.), Handbook of Emotions. (2nd ed.). New York: The Guilford Press.Google Scholar
Isen, Alice, Shalker, Thomas, Clark, Margaret & Karp, Lynn (1978). Affect, Accessibility of Material in Memory and Behavior: A Cognitive Loop? Journal of Personality and Social Psychology, 36, 1–12.Google Scholar
Kahneman, Daniel & Deaton, Angus (2010). High Income Improves Evaluation of Life but Not Emotional Well-Being. Proceedings of the National Academy of Sciences, 107(38), 16489–16493.Google Scholar
Krueger, Alan(2012). The Rise and Consequences of Inequality in the United States. Lecture at the Center for American Progress, Washington, D.C., January 12. (http://www.whitehouse.gov/sites/default/files/krueger_cap_speech_final_remarks.pdf).Google Scholar
Kubzansky, Laura, Gilthorpe, Mark & Goodman, Elizabeth (2012). A Prospective Study of Psychological Distress and Weight Status in Adolescents/Young Adults. Annals of Behavioral Medicine, 43, 219–228.Google Scholar
Lambert, Susan, Fugiel, Peter & Henly, Julia(2014). Precarious Work Schedules among Early-Career Employees. EINet Research Brief, University of Chicago, August; http://ssascholars.uchicago.edu/einet/files/lambert.fugiel.henly_.executive_summary.b.pdf.Google Scholar
Leonhart, David(2014). In One America, Cameras. In the Other, Guns and Diets. The New York Times, August 19, p. A3.Google Scholar
Ludwig, Jens, Duncan, Greg, Gennetian, Lisa, Katz, Lawrence, Kessler, Ronald & Kling, Jeffery (2012). Neighborhood Effects on the Long-Term Well-Being of Low-Income Adults. Science, 337(6101), 1505–1510.Google Scholar
Moynihan, Donald P., DeLeire, Thomas & Enami, K. (2015). A Life Worth Living: Evidence on the Relationship between Prosocial Motivation, Career Choice, and Happiness. American Review of Public Administration, 4(3), 311–326.Google Scholar
Mullainathan, Sendhil & Shafir, Eldar (2013). Scarcity: The New Science of Having Less and How It Defines Our Lives. New York: Henry Holt.Google Scholar
Oswald, Andrew, Proto, Eugenio & Sgroi, Daniel(forthcoming). Happiness and Productivity. Journal of Labor Economics, No. 4645, Bonn, Germany.Google Scholar
Office of National Statistics (2013). Personal Well-Being Across the UK, 2012–2013, Statistical Bulletin, London, October.Google Scholar
Rasmussen, Heather, Scheier, Michael & Greenhouse, Joel (2009). Optimism and Physical Health: A Review. Annals of Behavioral Medicine, 37, 239–256.CrossRefGoogle Scholar
Reeves, Richard(2014). Do Unpredictable Hours Undermine Upward Mobility? Social Mobility Memos, The Brookings Institution, December.Google Scholar
Robinson, Lisa A. & Hammitt, James K. (2011). Behavioral Economics and the Conduct of Benefit-Cost Analysis: Towards Principles and Standards. Journal of Benefit-Cost Analysis, 2(2), 1–29.Google Scholar
Stone, Arthur & Mackie, C.(Eds.) (2013). Subjective Well-Being: Measuring Happiness, Suffering, and Other Dimensions of Experience. Washington, D.C.: The National Academies Press; http://www.nap.edu/catalog.php?record_id=18548.Google Scholar
Swenson, K.(2015). Three Essays on the Relation between Income and Subjective Well-Being. PhD Dissertation, School of Public Policy, University of Maryland, College Park, April.Google Scholar
World Bank (2013). World Development Indicators. Washington, D.C.: The World Bank.Google Scholar