Abstract
The origin of happiness arouses people’s curiosity for a long time. Recent research introduces a utility theory for measuring subjective happiness in a social context. The past recent monetary conditions influence the present subjective happiness through two distinct channels: interpersonal comparison and self-adaptation. In this paper, we develop this theory to analyze behavioral patterns. Together with prospect theory’s gain-loss utility function, we exploit the theory in predicting psychological phenomena of craving. We explore the relationships between happiness and earnings. Under certain conditions, a high payoff disappoints you immediately and even leads to continuous disappointment across periods. We extend the explanations of the scenarios of New York cabdrivers’ labor-supply decisions. The effect of social comparisons may trigger workers’ behaviors of quit-working, which deepen related understandings of the literature.
Highlights
Whether money buys happiness has been frequently asked questions in both casual communications and academic debates
The ambition plays like a platform that comes from recent consumptions under social comparisons
In our advanced theoretical framework, (a) Experienced utility (EU) measures hedonic and affective experience that is cardinal but different from Decision utility (DU); (b) the total utility across periods is the sum of perperiod EU; and (c) EU depends on past outcomes or past and current experiences, or cultural and social influences
Summary
Whether money buys happiness has been frequently asked questions in both casual communications and academic debates. Closed to the problem raised in our paper, the literature [13] studied how the sudden acquisition of a large sum of money produces negative consequences and causes greater unhappiness at the individual level They distinguished between the pecuniary and non-pecuniary parts of individual happiness, whereas Chai’s theory [2] distinguishes one’s happiness that comes from the comparisons with himself and his competitors. Unlike past theoretical explanations of this well-studied scenario in literature, we uncover the effect of social comparisons on such time-flexible self-determined workers’ labor-supply decisions.
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