Loewenstein, G. (1996). Out of control: Visceral influences on behavior. Organizational behavior and human decision processes, 65(3), 272-292.

Understanding discrepancies between behavior and perceived self-interest has been one of the major, but largely untackled, theoretical challenges confronting decision theory from its infancy to the present. People often act against their self-interest in full knowledge that they are doing so; they experience a feeling of being “out of control.” This paper attributes this phenomenon to the operation of “visceral factors,” which include drive states such as hunger, thirst and sexual desire, moods and emotions, physical pain, and craving for a drug one is addicted to. The defining characteristics of visceral factors are, first, a direct hedonic impact (which is usually negative), and second, an effect on the relative desirability of different goods and actions. The largely aversive experience of hunger, for example, affects the desirability of eating, but also of other activities such as sex. Likewise, fear and pain are both aversive, and both increase the desirability of withdrawal behaviors. The visceral factor perspective has two central premises: First, immediately experienced visceral factors have a disproportionate effect on behavior and tend to “crowd out” virtually all goals other than that of mitigating the visceral factor. Second, people underweigh, or even ignore, visceral factors that they will experience in the future, have experienced in the past, or that are experienced by other people. The paper details these two assumptions, then shows how they can help to explain a wide range of phenomena: impulsivity and self-control, drug addiction, various anomalies concerning sexual behavior, the effect of vividness on decision making, and certain phenomena relating to motivation and action.

 

 

Loewenstein, G. (1996). Out of control: Visceral influences on behavior. Organizational behavior and human decision processes, 65(3), 272-292.

https://doi.org/10.1006/obhd.1996.0028

 

 

Kenny, C. (1999). Does growth cause happiness, or does happiness cause growth?. Kyklos, 52(1), 3-25.

Summary

Although there are many accepted faults with GNP per capita as a measure of the utility gained from wealth, most commentators would still argue that an increase in GNP per capita will have positive effects on total utility outweighing any negative externalities. Taking lessons from a conception of the nature and causes of happiness that harks back to Adam Smith and the original Utilitarians, this paper argues that increases in absolute income should have little effect on happiness in rich countries, and that there might instead be channels linking happiness causally with growth. Using time series evidence from happiness polls in ten wealthy countries, the paper finds no support for a causal link from growth to happiness, weak support for a reverse causation and further (weak) support for links between national equality and happiness and leisure time and happiness. The paper concludes by offering some consequences of this for theory and policy.

Zusammenfassung

Obwohl das BSP pro Kopf als Mass für den Nutzen von Wohlstand viele allgemein anerkannte Fehler aufweist, würden die meisten Kommentatoren nach wie vor behaupten, dass eine Zunahme des BSP pro Kopf eine positive Wirkung auf den Gesamtnutzen hat, die alle negativen Extemalitäten übersteigt. Aufbauend auf einer Vorstellung von der Natur und den Ursachen von Glück, die bis zu Adam Smith und den ursprünglichen Utilitarismus zurückreicht, argumentiert dieser Artikel, dass eine Zunahme des absoluten Einkommens vvenig Auswirkungen auf Glück in den reichen Ländern hat. Stattdessen könnten aber Kanäle existieren, die Glück kausal mit Wachstum verbinden. Die Auswertung von Zeitreihen aus Umfragen über Glück und Zufriedenheit in zehn reichen Ländern unterstützt diese These nicht, ergibt aber schwache Beweise für den umgekehrten Zusammenhang und weitere (schwache) Beweise für einen Zusammenhang zwischen Gleichheit und Glück bzw. Freizeit und Glück. Der Schluss des Papieres zieht daraus Konsequenzen für Theorie und Politik.

Résumé

Bien que les défauts de la mesure de l’utilité de la richesse par le PIB par tête soient largement reconnus et acceptés, la plupart des spécialistes soutiennent toujours l’idée selon laquelle les effets positifs d’une augmentation du PIB par tête sur l’utilité totale l’emportent largement sur ses externalités négatives. En se basant sur une conception de la nature et des causes du bien‐être qui remonte à Adam Smith et aux premiers utilitaristes, cet article soutient la thèse selon laquelle une augmentation du revenu absolu a peu d’effets sur le bien‐être des pays riches, et que, inversement, il existerait peut‐être des voies par lesquelles le bien‐être a des effets sur la croissance. En mettant en valeur les résultats de l’analyse de séries de données recueillies à travers des sondages sur le bien‐être dans dix pays riches, cet article montre qu’il n y a pas de rapport causal entre la croissance et le bienêtre, que le rapport causal entre bien‐être et croissance est faible, de même que ceux entre égalité national et bien‐être, et loisirs et bien‐être. Cet article conclut en offrant quelques conséquences de ces résultats pour la théorie et les politiques à mettre en oeuvre.

 

 

Kenny, C. (1999). Does growth cause happiness, or does happiness cause growth?. Kyklos, 52(1), 3-25.

https://doi.org/10.1111/j.1467-6435.1999.tb00576.x

 

Isen, A. M., Daubman, K. A., &Nowicki, G. P. (1987). Positive affect facilitates creative problem solving. Journal of Personality and Social Psychology, 52(6), 1122-1131.

Four experiments indicated that positive affect, induced by means of seeing a few minutes of a comedy film or by means of receiving a small bag of candy, improved performance on two tasks that are generally regarded as requiring creative ingenuity: Duncker’s (1945) candle task and M. T. Mednick, S. A. Mednick, and E. V. Mednick’s (1964) Remote Associates Test. One condition in which negative affect was induced and two in which subjects engaged in physical exercise (intended to represent affectless arousal) failed to produce comparable improvements in creative performance. The influence of positive affect on creativity was discussed in terms of a broader theory of the impact of positive affect on cognitive organization.

 

 

Isen, A. M., Daubman, K. A., &Nowicki, G. P. (1987). Positive affect facilitates creative problem solving. Journal of Personality and Social Psychology, 52(6), 1122-1131.

http://dx.doi.org/10.1037/0022-3514.52.6.1122

 

 

Schwarz, N. (1990). What respondents learn from scales: The informative functions of response alternatives. International Journal of Public Opinion Research, 2(3), 274-285.

Survey respondents are often asked to report the frequency with which they engage in a certain behavior by checking the appropriate alternative from a list of response categories provided to them. A psychological research program, reviewed in the present paper, indicates that response alternatives are not only measurement devices but constitute a source of information for the respondent. Specifically, respondents assume that the average or typical behavior is reflected by values stated in the middle range of the response alternatives and that the extremes of the list reflect the extremes of the distribution. This assumption affects their own responses in various ways. First, respondents use the range of the response alternatives as a frame of reference in estimating their own behavioral frequencies and report higher frequencies on scales that present high rather than low frequency response alternatives. Second, respondents extract comparison information from their own location on the response scale and use this information in making comparative judgments. Finally, if the target behavior is open to interpretation, as is often the case when subjective experiences are assessed, respondents use the response alternatives to determine the exact reference of the question. Accordingly, the same question in combination with different response alternatives is likely to assess different experiences. Implications for questionnaire construction are discussed.

 

 

Schwarz, N. (1990). What respondents learn from scales: The informative functions of response alternatives. International Journal of Public Opinion Research, 2(3), 274-285.

https://doi.org/10.1093/ijpor/2.3.274

 

Hermalin, B., &Isen, A. (2000). The effect of affect on economic and strategic decision making. CLEO Research Paper No. C01-5.

The standard economic model of decision making assumes a decision maker makes her choices to maximize her utility or happiness. Her current emotional state is not explicitly considered. Yet there is a large psychological literature that shows that current emotional state, in particular positive affect, has a significant effect on decision making. This paper offers a way to incorporate this insight from psychology into economic modeling. Moreover, this paper shows that this simple insight can parsimoniously explain a wide variety of behaviors.

 

 

Hermalin, B., &Isen, A. (2000). The effect of affect on economic and strategic decision making. CLEO Research Paper No. C01-5.

http://dx.doi.org/10.2139/ssrn.200295

 

 

Isen, A. M., &Levin, P. F. (1972). Effect of feeling good on helping: Cookies and kindness. Journal of Personality and Social Psychology, 21(3), 384-388.

Investigated the effects of a person’s positive affective state on his or her subsequent helpfulness to others. “Feeling good” was induced (a) in 52 male undergraduates by having received cookies while studying in a library (Study I), and (b) in 24 female and 17 male adults by having found a dime in the coin return of a public telephone (Study II). In Study I, where the dependent measure involved volunteering in reply to a student’s request, a distinction was made between specific willingness to help and general willingness to engage in any subsequent activity. In Study II, the dependent measure was whether Ss spontaneously helped to pick up papers that were dropped in front of them. On the basis of previous research, it was predicted that Ss who were thus made to “feel good” would be more helpful than control Ss. Results support the predictions

 

 

Isen, A. M., & Levin, P. F. (1972). Effect of feeling good on helping: Cookies and kindness. Journal of Personality and Social Psychology, 21(3), 384-388.

http://dx.doi.org/10.1037/h0032317  

Camerer, C., Loewenstein, G., &Prelec, D. (2005). Neuroeconomics: How neuroscience can inform economics. Journal of economic Literature, 43(1), 9-64.

Neuroeconomics uses knowledge about brain mechanisms to inform economic analysis, and roots economics in biology. It opens up the “black box” of the brain, much as organizational economics adds detail to the theory of the firm. Neuroscientists use many tools— including brain imaging, behavior of patients with localized brain lesions, animal behavior, and recording single neuron activity. The key insight for economics is that the brain is composed of multiple systems which interact. Controlled systems (“executive function”) interrupt automatic ones. Emotions and cognition both guide decisions. Just as prices and allocations emerge from the interaction of two processes—supply and demand— individual decisions can be modeled as the result of two (or more) processes interacting. Indeed, “dual-process” models of this sort are better rooted in neuroscientific fact, and more empirically accurate, than single-process models (such as utility-maximization). We discuss how brain evidence complicates standard assumptions about basic preference, to include homeostasis and other kinds of state-dependence. We also discuss applications to intertemporal choice, risk and decision making, and game theory. Intertemporal choice appears to be domain-specific and heavily influenced by emotion. The simplified ß-d of quasi-hyperbolic discounting is supported by activation in distinct regions of limbic and cortical systems. In risky decision, imaging data tentatively support the idea that gains and losses are coded separately, and that ambiguity is distinct from risk, because it activates fear and discomfort regions. (Ironically, lesion patients who do not receive fear signals in prefrontal cortex are “rationally” neutral toward ambiguity.) Game theory studies show the effect of brain regions implicated in “theory of mind”, correlates of strategic skill, and effects of hormones and other biological variables. Finally, economics can contribute to neuroscience because simple rational-choice models are useful for understanding highly-evolved behavior like motor actions that earn rewards, and Bayesian integration of sensorimotor information.

 

 

Camerer, C., Loewenstein, G., &Prelec, D. (2005). Neuroeconomics: How neuroscience can inform economics. Journal of economic Literature, 43(1), 9-64.

https://doi.org/10.1257/0022051053737843

 

 

Frey, B. S., &Stutzer, A. (1999). Measuring preferences by subjective well-being. Journal of Institutional and Theoretical Economics (JITE)/Zeitschrift für die gesamte Staatswissenschaft, 755-778. 

The measurement of preferences is an ongoing challenge for economists. New insights can be won by relying on reported subjective well-being in addition to observed behaviour. Empirical estimates of well-being functions, based on a sample of 5500 Swiss residents, find that unemployed persons are much unhappier than employed ones. Differences in life satisfaction between income classes are quite small and improvements in financial situation hardly raise happiness. Moreover, well-being functions are valuable in revealing the utility derived from constitutional conditions. Our econometric estimates suggest that more extended citizens’ participation possibilities in the democratic process tend to raise subjective well-being.

 

 

Frey, B. S., &Stutzer, A. (1999). Measuring preferences by subjective well-being. Journal of Institutional and Theoretical Economics (JITE)/Zeitschrift für die gesamte Staatswissenschaft, 755-778. 

https://www.jstor.org/stable/40752166