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anonymous referees for very constructive comments. We
BibTeX
@MISC{Clark_anonymousreferees,
author = {Andrew E. Clark and Paul Frijters and Michael A. Shields and Thomas Carlyle and Also Thank Colin Camerer and Richie Davidson},
title = {anonymous referees for very constructive comments. We},
year = {}
}
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Abstract
The well-known Easterlin paradox points out that average happiness has remained constant over time despite sharp rises in GNP per head. At the same time, a micro literature has typically found positive correlations between individual income and individual measures of subjective well-being. This paper suggests that these two findings are consistent with the presence of relative income terms in the utility function. Income may be evaluated relative to others (social comparison) or to oneself in the past (habituation). We review the evidence on relative income from the subjective well-being literature. We also discuss the relation (or not) between happiness and utility, and discuss some nonhappiness research (behavioral, experimental, neurological) related to income comparisons. We last consider how relative income in the utility function can affect economic models of behavior in the domains of consumption, investment, economic growth, savings, taxation, labor supply, wages, and migration. Every pitifulest whipster that walks within a skin has had his head filled with the notion that he is, shall be, or by all human and divine laws ought to be, “happy.”
Keyphrases
anonymous referee constructive comment utility function relative income relative income term individual measure income comparison pitifulest whipster sharp rise individual income average happiness well-known easterlin paradox point labor supply positive correlation subjective well-being divine law nonhappiness research social comparison subjective well-being literature economic growth micro literature economic model
