Research Article
BibTex RIS Cite

Will We be Happier in the Future? Research on the Effect of Covid-19 on Income and Life Satisfaction of the US Citizens

Year 2020, Volume: 19 Issue: COVID-19 Special Issue, 541 - 553, 31.10.2020

Hatime Kamilçelebi

https://doi.org/10.21547/jss.787948
Cited By: 1

Abstract

In this study, individuals’ mispredictions regarding their own income and life satisfaction in the future and projection bias effect, as one of the reasons for these mispredictions, are explained. Projection bias, a cognitive bias associated with individuals’ inability to empathize with their future selves, renders individuals mistaken that they would think the way they do now while making predictions about the future, and causes them to be mis-predicted about their future life satisfaction. Individuals may make systematic mistakes, by not considering adaptation to the future situation, upon currently predicting their future life satisfaction. Our study aims to explain that the life satisfaction of individuals, upon experiencing certain negative events such as Covid-19, tends to revert to their previous level when such negativity disappears or becomes a normal part of life, meaning, when individuals adapt to this situation. In our study, based on the data of the Gallup Panel and Gallup National Health and Well-Being Index in the USA, it is revealed that the income and life satisfaction of the US citizens decreased as soon as Covid-19 pandemic broke out. At the same time, the projection bias underlying the life satisfaction level of individuals in the next five years is explained by comparing with the previous years, and it is suggested that this situation should be taken into consideration upon determining policies regarding income and life satisfaction by supporting the idea that life satisfaction estimates may be erroneous given the literature.

Keywords

Mis-Predicted Subjective Well-Being Projection Bias Life Satisfaction Covid-19

References

  • Bernheim, B. D., & Rangel, A. (2016). Davranışsal Kamu Ekonomisi: Standart Olmayan Karar Mercileri ile Refah ve Politika Analizi. In Hatime Kamilçelebi (Ed.), Davranışsal İktisat ve Davranışsal İktisadın Uygulamaları. Ankara: Nobel Akademik Yay., 7-81.
  • Brickman, P., & Campbell, D. T. (1971). Hedonic relativism and planning the good society. In M. H.Appley (Ed.). Adaptation level theory: A symposium. New York: Academic Press, 287–302.
  • Cantril, H. (1965). The Pattern of Human Concern. New Jersey: Rutgers University Press.
  • Chang, T. Y., Huang, W., & Wang, Y. (2018). Something in the Air: Projection Bias and the Demand for Health Insurance. The Review of Economic Studies, 85(3), 1609–1634. https://doi.org/10.1093/restud/rdy016
  • Chena, S., Qin, P., Tan-Soo, J., & Wei, C. (2019). Recency and projection biases in air quality valuation by Chinese residents. Science of The Total Environment, 648, 618-630. https://doi.org/10.1016/j.scitotenv.2018.08.153
  • Clark, A. E., Diener, E., Georgellis, Y., & Lucas, R. (2008). Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis. Economic Journal, 118(529): F222- F243. https://doi.org/10.1111/j.1468-0297.2008.02150.x
  • Diener, E. (1984). Subjective Well-Being. Psychological Bulletin, 95(3), 542-575.
  • Diener, E., Lucas, R. E., & Scollon, C. N. (2006). Beyond the hedonic treadmill: Revising the adaptation theory of well-being. American Psychologist, 61(4), 305–314. https://doi.org/10.1037/0003-066X.61.4.305
  • Diener, E. (2009). Assessing Subjective Well-Being: Progress and Opportunities. Assessing Well-Being The Collected Works of Ed Diener, Ed. Ed Diener, Social Indicators Research Series, 39, 103-157.
  • Easterlin, R. A. (2003). Building a Better Theory of Well-Being. In Luigino Bruni and Pier Luigi Porta (eds). Economics and Happiness: Framing the Analysis. New York: Oxford University Press, 29-64.
  • Erta, K., Iscenko, Z., Hunt, S., & Brambley, W. (2013). Applying behavioural economics at the Financial Conduct Authority. Financial Conduct Authority, London.
  • Fehr, E., & Camerer, C. F. (2007). Social neuroeconomics: The neural circuitry of social preferences. Trends in Cognitive Sciences, 11(10), 419-427. doi: 10.1016/j.tics.2007.09.002
  • Frederick, S., & Loewenstein, G. (1999). Hedonic adaptation. In D. Kahneman, E. Diener, & N. Schwarz (Eds.), Well-being: The foundations of hedonic psychology, Russell Sage Foundation, 302–329.
  • Frey, B., & Stutzer, A. (2014). Economic Consequences of Mispredicting Utility. Journal of Happiness Studies, 15(4), 937-956. doi: 10.1007/s10902-013-9457-4
  • GALLUP, April 27-10 May 10 2020 https://news.gallup.com/poll/311135/adults-report-less-worry-happiness.aspx
  • 20-26 April 2020 https://news.gallup.com/poll/310250/worry-stress-fuel-record-drop-life-satisfaction.aspx
  • 30 September-14 October 2019 and 21 March – 5 April 2020 https://news.gallup.com/poll/308276/life-ratings-plummet-year-low.aspx
  • Kahneman, D. (1999). Objective happiness. In D. Kahneman, E. Diener, & N. Schwarz (Eds.), Well-being: The foundations of hedonic psychology, Russell Sage Foundation, 3–25.
  • Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Psychological and Cognitive Science, 107(38), 16489-16493.
  • Kahneman, D., & Thaler R. H. (2006). Anomalies: Utility Maximization and Experienced Utility. Journal of Economic Perspectives, 20(1), 221-234.
  • Kahneman, D., Wakker, P. P., & Sarin, R. (1997). Back to Bentham? Explorations of Experienced Utility. Quarterly Journal of Economics 112(2), 375-405.
  • Kahneman, D., Krueger, A. B., Schkade, D., Schwarz, N., & Stone, A. A. (2006). Would you be happier if you were richer? A focusing illusion. Science. 312(5782), 1908-1910. doi:10.1126/science.1129688
  • Kamilçelebi, H., & Veenhoven, R. (2016). The Difference Between Expected and Experienced Utility: Findings from Some Studies on Having Children. The Journal of Academic Social Science Studies, 50, 343-354. http://dx.doi.org/10.9761/JASSS3591
  • Kamilçelebi, H. (2018a). Beklenen Fayda ve Deneyimlenen Fayda: Gelir Artışı Üzerine Bir Araştırma. Bursa: Ekin Yayınevi.
  • Kamilçelebi, H. (2018b). The Difference Between Expected And Experienced Utility: A Case Study On a Salary Increase. Saarbrücken: Lambert Academic Publishing.
  • Kamilçelebi, H. (2019). Davranışsal İktisat. London: IJOPEC Publication.
  • Loewenstein, G., & Adler, D. (1995). A Bias in the Prediction of Tastes. Economic Journal, 105(431), 929–937. doi: 10.2307/2235159
  • Loewenstein, G., O’Donoghue, T., & Rabin, M. (2003). Projection bias in predicting future utility. Quarterly Journal of Economics, 118(4), 1209–1248. https://doi.org/10.1162/003355303322552784
  • Loewenstein, G., & Schkade, D. (1999). Wouldn’t It Be Nice? Predicting Future Feelings. In Daniel Kahneman, Ed Diener and Norbert Schwarz (eds). Well-Being: The Foundation of Hedonic Psychology. New York: Russell Sage Foundation, 85-105.
  • Luhman, M., Hofmann, W., Eid, M., & Lucas, R. E. (2012). Subjective Well-Being and Adaptation to Life Events: A Meta-Analysis. Journal of Personality and Social Psychology, 102(3), 592-615. doi: 10.1037/a0025948
  • Myers, D. G., & Diener, E. (1995). Who Is Happy?. Psychological Science, 6(1), 10-19.
  • NORC Official Web Site, https://www.norc.org/Pages/default.aspx
  • Odermatt, R., & Stutzer, A. (2015). (Mis-)Predicted Subjective Well-Being Following Life Events. IZA Discussion Papers 9252, 1-42.
  • Oswald, A. & Powdthavee, N. (2008). Does Happiness Adapt? A Longitudinal Study of Disability with Implications for Economists and Judges. Journal of Public Economics, 92(5-6), 1061-1077. https://doi.org/10.1016/j.jpubeco.2008.01.002
  • Schkade, D. A., & Kahneman, D. (1998). Does living in California make people happy? A focusing illusion in judgments of life satisfaction. Psychological Science, 9(5), 340–346. https://doi.org/10.1111/1467-9280.00066
  • Stutzer, A., & Frey, B., (2008). ‘Stress that doesn’t pay: The commuting paradox. The Scandinavian Journal of Economics, 110(2), 339-366. https://doi.org/10.1111/j.1467-9442.2008.00542.x
  • Stutzer, A. & Frey, B. S. (2006). Does Marriage Make People Happy, Or Do Happy People Get Married? Journal of Socio-Economics, 35(2), 326-347. https://doi.org/10.1016/j.socec.2005.11.043
  • Van Boven, L. & Loewenstein, G. (2003). Social Projection of Transient Drive States. Personality and Social Psychology Bulletin, 29(9), 1159-1168. doi: 10.1177/0146167203254597
  • Van Boven, L., Dunning D., & Loewenstein, G. (2000). Egocentric Empathy Gaps between Owners and Buyers: Misperceptions of the Endowment Effect. Journal of Personality and Social Psychology, 79(1), 66–76.
  • Van Praag, B. M. S., & Van der Sar, N. L. (1988). Household Cost Functions and Equivalence Scale. Journal of Human Resources, 23(2), 193-210.
  • Van Praag, B., (1977). The perception of welfare inequality, European Economic Review, 10(2), 189-207.
  • Veenhoven, R. (2004). Happy Life Years: Measures of gross national happiness, Proceedings of the First International Conference on Operationalization of Gross National Happiness, 294-296.
  • Veenhoven, R. (1984). Condition of Happiness. D. Reidel Publishing Company.

Year 2020, Volume: 19 Issue: COVID-19 Special Issue, 541 - 553, 31.10.2020

Hatime Kamilçelebi

https://doi.org/10.21547/jss.787948
Cited By: 1

Abstract

References

  • Bernheim, B. D., & Rangel, A. (2016). Davranışsal Kamu Ekonomisi: Standart Olmayan Karar Mercileri ile Refah ve Politika Analizi. In Hatime Kamilçelebi (Ed.), Davranışsal İktisat ve Davranışsal İktisadın Uygulamaları. Ankara: Nobel Akademik Yay., 7-81.
  • Brickman, P., & Campbell, D. T. (1971). Hedonic relativism and planning the good society. In M. H.Appley (Ed.). Adaptation level theory: A symposium. New York: Academic Press, 287–302.
  • Cantril, H. (1965). The Pattern of Human Concern. New Jersey: Rutgers University Press.
  • Chang, T. Y., Huang, W., & Wang, Y. (2018). Something in the Air: Projection Bias and the Demand for Health Insurance. The Review of Economic Studies, 85(3), 1609–1634. https://doi.org/10.1093/restud/rdy016
  • Chena, S., Qin, P., Tan-Soo, J., & Wei, C. (2019). Recency and projection biases in air quality valuation by Chinese residents. Science of The Total Environment, 648, 618-630. https://doi.org/10.1016/j.scitotenv.2018.08.153
  • Clark, A. E., Diener, E., Georgellis, Y., & Lucas, R. (2008). Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis. Economic Journal, 118(529): F222- F243. https://doi.org/10.1111/j.1468-0297.2008.02150.x
  • Diener, E. (1984). Subjective Well-Being. Psychological Bulletin, 95(3), 542-575.
  • Diener, E., Lucas, R. E., & Scollon, C. N. (2006). Beyond the hedonic treadmill: Revising the adaptation theory of well-being. American Psychologist, 61(4), 305–314. https://doi.org/10.1037/0003-066X.61.4.305
  • Diener, E. (2009). Assessing Subjective Well-Being: Progress and Opportunities. Assessing Well-Being The Collected Works of Ed Diener, Ed. Ed Diener, Social Indicators Research Series, 39, 103-157.
  • Easterlin, R. A. (2003). Building a Better Theory of Well-Being. In Luigino Bruni and Pier Luigi Porta (eds). Economics and Happiness: Framing the Analysis. New York: Oxford University Press, 29-64.
  • Erta, K., Iscenko, Z., Hunt, S., & Brambley, W. (2013). Applying behavioural economics at the Financial Conduct Authority. Financial Conduct Authority, London.
  • Fehr, E., & Camerer, C. F. (2007). Social neuroeconomics: The neural circuitry of social preferences. Trends in Cognitive Sciences, 11(10), 419-427. doi: 10.1016/j.tics.2007.09.002
  • Frederick, S., & Loewenstein, G. (1999). Hedonic adaptation. In D. Kahneman, E. Diener, & N. Schwarz (Eds.), Well-being: The foundations of hedonic psychology, Russell Sage Foundation, 302–329.
  • Frey, B., & Stutzer, A. (2014). Economic Consequences of Mispredicting Utility. Journal of Happiness Studies, 15(4), 937-956. doi: 10.1007/s10902-013-9457-4
  • GALLUP, April 27-10 May 10 2020 https://news.gallup.com/poll/311135/adults-report-less-worry-happiness.aspx
  • 20-26 April 2020 https://news.gallup.com/poll/310250/worry-stress-fuel-record-drop-life-satisfaction.aspx
  • 30 September-14 October 2019 and 21 March – 5 April 2020 https://news.gallup.com/poll/308276/life-ratings-plummet-year-low.aspx
  • Kahneman, D. (1999). Objective happiness. In D. Kahneman, E. Diener, & N. Schwarz (Eds.), Well-being: The foundations of hedonic psychology, Russell Sage Foundation, 3–25.
  • Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Psychological and Cognitive Science, 107(38), 16489-16493.
  • Kahneman, D., & Thaler R. H. (2006). Anomalies: Utility Maximization and Experienced Utility. Journal of Economic Perspectives, 20(1), 221-234.
  • Kahneman, D., Wakker, P. P., & Sarin, R. (1997). Back to Bentham? Explorations of Experienced Utility. Quarterly Journal of Economics 112(2), 375-405.
  • Kahneman, D., Krueger, A. B., Schkade, D., Schwarz, N., & Stone, A. A. (2006). Would you be happier if you were richer? A focusing illusion. Science. 312(5782), 1908-1910. doi:10.1126/science.1129688
  • Kamilçelebi, H., & Veenhoven, R. (2016). The Difference Between Expected and Experienced Utility: Findings from Some Studies on Having Children. The Journal of Academic Social Science Studies, 50, 343-354. http://dx.doi.org/10.9761/JASSS3591
  • Kamilçelebi, H. (2018a). Beklenen Fayda ve Deneyimlenen Fayda: Gelir Artışı Üzerine Bir Araştırma. Bursa: Ekin Yayınevi.
  • Kamilçelebi, H. (2018b). The Difference Between Expected And Experienced Utility: A Case Study On a Salary Increase. Saarbrücken: Lambert Academic Publishing.
  • Kamilçelebi, H. (2019). Davranışsal İktisat. London: IJOPEC Publication.
  • Loewenstein, G., & Adler, D. (1995). A Bias in the Prediction of Tastes. Economic Journal, 105(431), 929–937. doi: 10.2307/2235159
  • Loewenstein, G., O’Donoghue, T., & Rabin, M. (2003). Projection bias in predicting future utility. Quarterly Journal of Economics, 118(4), 1209–1248. https://doi.org/10.1162/003355303322552784
  • Loewenstein, G., & Schkade, D. (1999). Wouldn’t It Be Nice? Predicting Future Feelings. In Daniel Kahneman, Ed Diener and Norbert Schwarz (eds). Well-Being: The Foundation of Hedonic Psychology. New York: Russell Sage Foundation, 85-105.
  • Luhman, M., Hofmann, W., Eid, M., & Lucas, R. E. (2012). Subjective Well-Being and Adaptation to Life Events: A Meta-Analysis. Journal of Personality and Social Psychology, 102(3), 592-615. doi: 10.1037/a0025948
  • Myers, D. G., & Diener, E. (1995). Who Is Happy?. Psychological Science, 6(1), 10-19.
  • NORC Official Web Site, https://www.norc.org/Pages/default.aspx
  • Odermatt, R., & Stutzer, A. (2015). (Mis-)Predicted Subjective Well-Being Following Life Events. IZA Discussion Papers 9252, 1-42.
  • Oswald, A. & Powdthavee, N. (2008). Does Happiness Adapt? A Longitudinal Study of Disability with Implications for Economists and Judges. Journal of Public Economics, 92(5-6), 1061-1077. https://doi.org/10.1016/j.jpubeco.2008.01.002
  • Schkade, D. A., & Kahneman, D. (1998). Does living in California make people happy? A focusing illusion in judgments of life satisfaction. Psychological Science, 9(5), 340–346. https://doi.org/10.1111/1467-9280.00066
  • Stutzer, A., & Frey, B., (2008). ‘Stress that doesn’t pay: The commuting paradox. The Scandinavian Journal of Economics, 110(2), 339-366. https://doi.org/10.1111/j.1467-9442.2008.00542.x
  • Stutzer, A. & Frey, B. S. (2006). Does Marriage Make People Happy, Or Do Happy People Get Married? Journal of Socio-Economics, 35(2), 326-347. https://doi.org/10.1016/j.socec.2005.11.043
  • Van Boven, L. & Loewenstein, G. (2003). Social Projection of Transient Drive States. Personality and Social Psychology Bulletin, 29(9), 1159-1168. doi: 10.1177/0146167203254597
  • Van Boven, L., Dunning D., & Loewenstein, G. (2000). Egocentric Empathy Gaps between Owners and Buyers: Misperceptions of the Endowment Effect. Journal of Personality and Social Psychology, 79(1), 66–76.
  • Van Praag, B. M. S., & Van der Sar, N. L. (1988). Household Cost Functions and Equivalence Scale. Journal of Human Resources, 23(2), 193-210.
  • Van Praag, B., (1977). The perception of welfare inequality, European Economic Review, 10(2), 189-207.
  • Veenhoven, R. (2004). Happy Life Years: Measures of gross national happiness, Proceedings of the First International Conference on Operationalization of Gross National Happiness, 294-296.
  • Veenhoven, R. (1984). Condition of Happiness. D. Reidel Publishing Company.
There are 43 citations in total.

Details

Primary Language English
Subjects Economics
Journal Section Economics
Authors

Hatime Kamilçelebi 0000-0002-1028-7135

Publication Date October 31, 2020
Submission Date August 30, 2020
Acceptance Date October 15, 2020
Published in Issue Year 2020 Volume: 19 Issue: COVID-19 Special Issue

Cite

APA Kamilçelebi, H. (2020). Will We be Happier in the Future? Research on the Effect of Covid-19 on Income and Life Satisfaction of the US Citizens. Gaziantep University Journal of Social Sciences, 19(COVID-19 Special Issue), 541-553. https://doi.org/10.21547/jss.787948

Cited By

SOSYOEKONOMİK STATÜNÜN DUYGU VE DAVRANIŞLARA ETKİSİ
M U Iktisadi ve Idari Bilimler Dergisi
https://doi.org/10.14780/muiibd.1439507