Summary
In the last two decades "happiness economics" has emerged as a burgeoning field of research with potentially significant implications for public policy. Governments have recognized this development and increasingly track measures of subjective well-being. However, a major problem with such measures is hedonic adaptation: an intervention that improves a person's life may only temporarily raise their subjective well-being, as they adapt to their condition over time. Most of the evidence on hedonic adaptation to date is non-experimental. This paper takes a novel approach. A randomized controlled trial of a health intervention in Uganda is used to examine whether and to what extent individuals adapt to improvements in their well-being.
Specifically, the randomized provision of medical equipment to adults with lower limb disabilities is used to study the effect of the treatment on both medical measures and subjective well-being.In this School of Economics working paper Marta Barazzetta, Simon Appleton and Trudy Owens find that providing medical equipment to a random sample of Ugandan adults with lower limb disabilities has a positive effect on their physical health. Treated patients experience a significant improvement in life satisfaction initially, but the effect is not prolonged. After one year, life satisfaction returns to the pre-treatment level despite the improvement in their mobility, as assessed by objective medical measures. This evidence of adaptation is supported by observations of changes in reference levels and is robust to alternative estimation methods including instrumental variable approach and intention-to-treat analysis.
CREDIT Discussion Paper 15/08, Hedonic adaptation to treatment: Evidence from a medical intervention by Marta Barazzetta, Simon Appleton and Trudy Owens
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Authors
Marta Barazzetta, Simon Appleton and Trudy Owens
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Posted on Thursday 31st December 2015