Measuring happiness under interpersonal comparison: An advanced theoretical framework and implications

Abstract

The origin of happiness arouses people’s curiosity for a long time. Recent research introduces a utility theory for measuring subjective happiness in a social context. The past recent monetary conditions influence the present subjective happiness through two distinct channels: interpersonal comparison and self-adaptation. In this paper, we develop this theory to analyze behavioral patterns. Together with prospect theory’s gain-loss utility function, we exploit the theory in predicting psychological phenomena of craving. We explore the relationships between happiness and earnings. Under certain conditions, a high payoff disappoints you immediately and even leads to continuous disappointment across periods. We extend the explanations of the scenarios of New York cabdrivers’ labor-supply decisions. The effect of social comparisons may trigger workers’ behaviors of quit-working, which deepen related understandings of the literature.