Rayo, L., &Becker, G. S. (2007). Evolutionary efficiency and happiness. Journal of Political Economy, 115(2), 302-337.

We model happiness as a measurement tool used to rank alternative actions. Evolution favors a happiness function that measures the individual’s success in relative terms. The optimal function is based on a time‐varying reference point—or performance benchmark—that is updated over time in a statistically optimal way in order to match the individual’s potential. Habits and peer comparisons arise as special cases of such an updating process. This updating also results in a volatile level of happiness that continuously reverts to its long‐term mean. Throughout, we draw a parallel with a problem of optimal incentives, which allows us to apply statistical insights from agency theory to the study of happiness.

https://doi.org/10.1086/516737

Tyler, T. R., Huo, Y. J., &Lind, E. A. (1999). The two psychologies of conflict resolution: Differing antecedents of pre-experience choices and post-experience evaluations.

The literature on the `myth of self-interest’ model of perceived human motivation suggests that people believe that both they and others are more motivated by self-interest than is actually the case. Four studies are reported which test one implication of the myth of self-interest: the psychology of pre-experience preferences and post-experience evaluations will differ. We hypothesize that people arrive at pre-experience preferences for decision-making procedures based upon the belief that they want to maximize their self-interest. Further, they will define their self-interest in material terms. Consequently, they choose procedures that they believe promise them the best material outcomes. However, post-experience evaluations are based upon a different factor – the quality of the treatment received during the course of the procedure. The results of all four studies support the suggestion that the psychology of preference and of evaluation differ as predicted. The findings suggest that preference and choice should be viewed as reflecting different psychological processes.

Tyler, T. R., Huo, Y. J., &Lind, E. A. (1999). The two psychologies of conflict resolution: Differing antecedents of pre-experience choices and post-experience evaluations. Group Processes &Intergroup Relations, 2(2), 99-118.

https://doi.org/10.1177/1368430299022001

Kasser, T., &Ryan, R. M. (1996). Further examining the American dream: Differential correlates of intrinsic and extrinsic goals.

Empirical research and organismic theories suggest that lower well-being is associated with having extrinsic goals focused on rewards or praise relatively central to one’s personality in comparison to intrinsic goals congruent with inherent growth tendencies. In a sample of adult subjects (Study 1), the relative importance and efficacy of extrinsic aspirations for financial success, an appealing appearance, and social recognition were associated with lower vitality and self-actualization and more physical symptoms. Conversely, the relative importance and efficacy of intrinsic aspirations for self-acceptance, affiliation, community feeling, and physical health were associated with higher well-being and less distress. Study 2 replicated these findings in a college sample and extended them to measures of narcissism and daily affect. Three reasons are discussed as to why extrinsic aspirations relate negatively to well-being, and future research directions are suggested.

Kasser, T., &Ryan, R. M. (1996). Further examining the American dream: Differential correlates of intrinsic and extrinsic goals. Personality and social psychology bulletin, 22(3), 280-287.

https://doi.org/10.1177/0146167296223006

Sirgy, M. J. (1998). Materialism and quality of life. Social indicators research, 43(3), 227-260.

An attempt is made in this paper to establish a foundation for a theory of materialism and quality of life. The theory posits that overall life satisfaction (quality of life) is partly determined by satisfaction with standard of living. Satisfaction with standard of living, in turn, is determined by evaluations of one’s actual standard of living compared to a set goal. Materialists experience greater dissatisfaction with their standard of living than nonmaterialists, which in turn spills over to overall life causing dissatisfaction with life in general. Materialists experience dissatisfaction with their standard of living because they set standard of living goals that are inflated and unrealistically high. These goals set by materialists are more influenced by affective-based expectations (such as ideal, deserved, and need-based expectations) than cognitive-based ones (such as predictive, past, and ability based expectations). Materialists’ ideal standard-of-living expectations are influenced by social comparisons involving remote referents, more so than comparisons involving standards that are situationally imposed. Examples of situationally-imposed standards are perceptions of wealth, income, and material possessions of family, friends, neighbors, colleagues, and so on. In contrast, examples of standards based on remote sources are perceptions of standard of living of others in one’s community, town, state, country, other countries; perceptions of standard of living of others based on gender, age, education, ethnicity, occupation, and social class. This tendency to use remote referents in social comparisons may account for materialists’ inflated and value-laden expectations of their standard of living. Materialists’ deserved standard-of-living expectations are influenced by the tendency to engage in equity comparisons involving income and work. Thus, materialists compare themselves with others that seem to have more income and worked no harder. These equity comparisons generate feelings of inequity, injustice, anger, or envy. These emotions may also account for materialists’ inflated and value-laden expectations of their standard of living. Materialists’ standard-of-living expectations based on minimum needs are influenced by the tendency to spend more than generate income. This proclivity to overconsume and underproduce may be partly responsible for materialists’ inflated and value-laden expectations of their standard of living.

Sirgy, M. J. (1998). Materialism and quality of life. Social indicators research, 43(3), 227-260.

https://doi.org/10.1023/A:1006820429653

Rosen, S. (1974). Hedonic prices and implicit markets: product differentiation in pure competition. Journal of political economy, 82(1), 34-55.

A class of differentiated products is completely described by a vector of objectively measured characteristics. Observed product prices and the specific amounts of haracteristics associated with each good define a set of implicit or “hedonic” prices. A theory of hedonic prices is formulated as a problem in the economics of spatial equilibrium in which the entire set of implicit prices guides both consumer and producer locational decisions in characteristics space. Buyer and seller choices, as well as the meaning and nature of market equilibrium, are analyzed. Empirical implications for hedonic price regressions and index number con- struction are pointed out.

Rosen, S. (1974). Hedonic prices and implicit markets: product differentiation in pure competition. Journal of political economy, 82(1), 34-55.

Robinson, M. D., &Clore, G. L. (2002). Belief and feeling: Evidence for an accessibility model of emotional self-report. Psychological Bulletin, 128(6), 934-960.

This review organizes a variety of phenomena related to emotional self-report. In doing so, the authors offer an accessibility model that specifies the types of factors that contribute to emotional self-reports under different reporting conditions. One important distinction is between emotion, which is episodic, experiential, and contextual, and beliefs about emotion, which are semantic, conceptual, and decontextualized. This distinction is important in understanding the discrepancies that often occur when people are asked to report on feelings they are currently experiencing versus those that they are not currently experiencing. The accessibility model provides an organizing framework for understanding self-reports of emotion and suggests some new directions for research.

Robinson, M. D., & Clore, G. L. (2002). Belief and feeling: Evidence for an accessibility model of emotional self-report. Psychological Bulletin, 128(6), 934-960.

http://dx.doi.org/10.1037/0033-2909.128.6.934

Mitchell, T. R., Thompson, L., Peterson, E., &Cronk, R. (1997). Temporal adjustments in the evaluation of events: The “rosy view”. Journal of experimental social psychology, 33(4), 421-448.

In a series of three investigations we examined people’s anticipation of, actual experiences in, and subsequent recollection of meaningful life events: a trip to Europe, a Thanksgiving vacation, and a 3-week bicycle trip in California. The results of all three studies supported the hypothesis that people’s expectations of personal events are more positive than their actual experience during the event itself, and their subsequent recollection of that event is more positive than the actual experience. The “rosy view” phenomenon is associated with an increase in the number of negative thoughts during the event which seem to be caused by distractions, disappointment, and a less positive view of the self. However, these effects are short-lived; within days after the event, people have much more positive evaluations of the event. We discuss alternative interpretations for our findings and implications for group and organizational settings.

Mitchell, T. R., Thompson, L., Peterson, E., &Cronk, R. (1997). Temporal adjustments in the evaluation of events: The “rosy view”. Journal of experimental social psychology, 33(4), 421-448.

https://doi.org/10.1006/jesp.1997.1333

Kahneman, D., &Knetsch, J. L. (1992). Valuing public goods: the purchase of moral satisfaction. Journal of environmental economics and management, 22(1), 57-70.

Contingent valuation surveys in which respondents state their willingness to pay (WTP) for public goods are coming into use in cost-benefit analyses and in litigation over environmental losses. The validity of the method is brought into question by several experimental observations. An embedding effect is demonstrated, in which WTP for a good varies depending on whether it is evaluated on its own or as part of a more inclusive category. The ordering of various public issues by WTP is predicted with significant accuracy by independent ratings of the moral satisfaction associated with contributions to these causes. Contingent valuation responses reflect the willingness to pay for the moral satisfaction of contributing to public goods, not the economic value of these goods.

Kahneman, D., &Knetsch, J. L. (1992). Valuing public goods: the purchase of moral satisfaction. Journal of environmental economics and management, 22(1), 57-70.

https://doi.org/10.1016/0095-0696(92)90019-S

Chay, K. Y., &Greenstone, M. (2005). Does air quality matter? Evidence from the housing market. Journal of political Economy, 113(2), 376-424.

We exploit the structure of the Clean Air Act to provide new evidence on the capitalization of total suspended particulates (TSPs) air pollution into housing values. This legislation imposes strict regulations on polluters in “nonattainment” counties, which are defined by concentrations of TSPs that exceed a federally set ceiling. TSPs nonattainment status is associated with large reductions in TSPs pollution and increases in county‐level housing prices. When nonattainment status is used as an instrumental variable for TSPs, we find that the elasticity of housing values with respect to particulates concentrations ranges from −0.20 to −0.35. These estimates of the average marginal willingness to pay for clean air are robust to quasi‐experimental regression discontinuity and matching specification tests. Further, they are far less sensitive to model specification than cross‐sectional and fixed‐effects estimates, which occasionally have the “perverse” sign. We also find modest evidence that the marginal benefit of reductions of TSPs is lower in communities with relatively high pollution levels, which is consistent with preference‐based sorting. Overall, the improvements in air quality induced by the mid‐1970s TSPs nonattainment designation are associated with a $45 billion aggregate increase in housing values in nonattainment counties between 1970 and 1980.

Chay, K. Y., &Greenstone, M. (2005). Does air quality matter? Evidence from the housing market. Journal of political Economy, 113(2), 376-424.

https://doi.org/10.1086/427462

Welsch, H. (2002). Preferences over prosperity and pollution: environmental valuation based on happiness surveys. Kyklos, 55(4), 473-494.

This paper uses cross–national data from happiness surveys, jointly with data on per capita income and pollution, to examine how self–reported well–being varies with prosperity and environmental conditions. This approach allows us to show that citizens care about prosperity and the environment, and to calculate the trade–off people are willing to make between them. The paper finds that the effect of urban air pollution on subjective well–being shows up as a considerable monetary valuation of improved air quality. For instance, a representative German citizen would need to be given more than 1900 $ per year in order to accept the typical urban air pollution level prevailing in Japan. The subjective marginal valuation of air pollution is compared with marginal abatement costs from the literature.

Welsch, H. (2002). Preferences over prosperity and pollution: environmental valuation based on happiness surveys. Kyklos, 55(4), 473-494.

https://doi.org/10.1111/1467-6435.00198