Paper #436

Title:

Relative payoffs and happiness: An experimental study

Authors:

Gary Charness and Brit Grosskopf

Date:

August 1999 (Revised: January 2000)

Abstract:

Some current utility models presume that people are concerned with their relative standing in a reference group. If this is true, do certain types care more about this than others? Using simple binary decisions and self-reported happiness, we investigate both the prevalence of ``difference aversion'' and whether happiness levels influence the taste for social comparisons. Our decision tasks distinguish between a person’s desire to achieving the social optimum, equality or advantageous relative standing. Most people appear to disregard relative payoffs, instead typically making choices resulting in higher social payoffs. While we do not find a strong general correlation between happiness and concern for relative payoffs, we do observe that a willingness to lower another person’s payoff below one’s own (competitive preferences) seems correlated with unhappiness.

Keywords:

Happiness, relative payoffs, social preferences, subjective well-being, Leex

JEL codes:

A12, A13, B49, C91, D63

Area of Research:

Behavioral and Experimental Economics

Published in:

Journal of Economic Behavior and Organization, vol. 45(3), pp. 301-328, 2001

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