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  4. November 2014
  5. Can Marginal Rates of Substitution Be Inferred from Happiness Data? Evidence from Residency Choices

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Can Marginal Rates of Substitution Be Inferred from Happiness Data? Evidence from Residency Choices

  • Daniel J. Benjamin
  • Ori Heffetz
  • Miles S. Kimball
  • Alex Rees-Jones
American Economic Review
vol. 104, no. 11, November 2014
(pp. 3498–3528)
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Abstract

We survey 561 students from U.S. medical schools shortly after they submit choice rankings over residencies to the National Resident Matching Program. We elicit (a) these choice rankings, (b) anticipated subjective well-being (SWB) rankings, and (c) expected features of the residencies (such as prestige). We find substantial differences between choice and anticipated-SWB rankings in the implied tradeoffs between residency features. In our data, evaluative SWB measures (life satisfaction and Cantril's ladder) imply tradeoffs closer to choice than does affective happiness (even time-integrated), and as close as do multi-measure SWB indices. We discuss implications for using SWB data in applied work.

Citation

Benjamin, Daniel J., Ori Heffetz, Miles S. Kimball, and Alex Rees-Jones. 2014. "Can Marginal Rates of Substitution Be Inferred from Happiness Data? Evidence from Residency Choices." American Economic Review, 104 (11): 3498–3528. DOI: 10.1257/aer.104.11.3498

Additional Materials

JEL Classification

  • D12 Consumer Economics: Empirical Analysis
  • I31 General Welfare; Well-Being