Behavioral economics lect 7: nudge part 4 (Beyond experience utility…
Behavioral economics lect 7: nudge part 4
Experience utility and adaptation
Problem with experience utility
People adapt to circumstances
patients typically report greater happiness and quality of life than healthy people think they would in similar circumstances, across a wide range of health conditions (Ubel et al. 2005)
Major life events have a surprisingly small effect on measured happiness.
at the same time patients want to make sacrifices to restore their lost function.
Brickman et al. (1978)
Three groups of subjects were asked to rate on a 6-point scale (0-5) how happy they were and how much pleasure they derive from selected daily activities.
(2) Accident victims: paraplegics and quadriplegics the accident was between 1 month and 1 year ago
(1) Lottery winners
• winnings between $50 000 and $1 million in 1978 dollars
• they won 1 month to 1.5 years ago
Lottery winners derive less pleasure from daily activities than control
Lottery winners are not happier than control (neither now, nor their recall of the past)
Accident was rated as 1.28
Victims recall their pasts to be happier than control
Winning the lottery was rated as 3.78
Victims are less happy now but still score above midpoint of the scale
Measuring experience utility
fill out a diary to summarize episodes that occurred in the past and then rate these episodes.
(e.g. asking after the experience how you rate it) – duration neglect and peak-end rule
: Moment to moment measures of wellbeing (e.g. a mobile phone app regularly asks for your feelings during an experience)
: “In general, how satisfied would you say you are with your life?” (greater happiness on sunny days)
Measuring experience utility: examples
Day reconstruction: packets 2 & 3 on
Beyond experience utility
“Experience utility fails to capture a wide range of dimensions of existence that people deeply and legitimately care about.” (Loewenstein and Ubel, 2008)
There may be other dimensions of experience that are not captured by experience utility, but that we do value. (e.g. knowledge and wisdom)
We like to experience a range of emotions, i.e. we like some variance in emotions.
We care about the meaning of what we do.
We care about the opportunities we have (capabilities)
Decision utility can capture these dimensions.