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

A Comparison of Ordered Categorical versus Discrete Choices within a Stated Preference Survey of Whole-Blood Donors

HIGHLIGHTS

This article compares the relative preferences from stated preference (SP) questions requiring ordered categorical versus discrete choice responses. The approaches were contrasted for blood donation service characteristics that offer opportunities to donate blood.The estimates of relative preferences for alternative blood donation service characteristics were similar between the 2 forms of SP approach.This study illustrates how SP survey questions can be formulated to provide responses on an ordered categorical scale and to estimate marginal rates of substitution between different attributes, which can be compared with those derived from discrete choice experiment (DCE) choices.The article highlights the potential value of considering alternative choice framings rather than relying solely on DCEs.

The scientific value of numerical measures of human feelings

Human feelings cannot be expressed on a numerical scale. There are no units of measurement for feelings. However, such data are extensively collected in the modern world—by governments, corporations, and international organizations. Why? Our study finds that a feelings integer (like my happiness is X out of 10) has more predictive power than a collection of socioeconomic influences. Moreover, there is a clear link between those feelings numbers and later get-me-out-of-here actions. Finally, the feelings-to-actions relationship appears replicable and not too far from linear. Remarkably, therefore, humans somehow manage to choose their numerical answers in a systematic way as though they sense within themselves—and can communicate—a reliable numerical scale for their feelings. How remains an unsolved puzzle.

Human feelings measured in integers (my happiness is an 8 out of 10, my pain 2 out of 6) have no objective scientific basis. They are “made-up” numbers on a scale that does not exist. Yet such data are extensively collected—despite criticism from, especially, economists—by governments and international organizations. We examine this paradox. We draw upon longitudinal information on the feelings and decisions of tens of thousands of randomly sampled citizens followed through time over four decades in three countries (n = 700,000 approximately). First, we show that a single feelings integer has greater predictive power than does a combined set of economic and social variables. Second, there is a clear inverse relationship between feelings integers and subsequent get-me-out-of-here actions (in the domain of neighborhoods, partners, jobs, and hospital visits). Third, this feelings-to-actions relationship takes a generic form, is consistently replicable, and is fairly close to linear in structure. Therefore, it seems that human beings can successfully operationalize an integer scale for feelings even though there is no true scale. How individuals are able to achieve this is not currently known. The implied scientific puzzle—an inherently cross-disciplinary one—demands attention.

Does the evaluability bias hold when giving to animal charities?

When evaluating a charity by itself, people tend to overweight overhead costs in relation to cost-effectiveness. However, when evaluating charities side by side, they base their donations on cost-effectiveness. I conducted a replication and extension of Caviola et al. (2014; Study 1) using a 3 (High Overhead/Effectiveness, Low Overhead/Effectiveness, Both) x 2 (Humans, Animals) between-subjects design. I found that the overhead ratio is an easier attribute to evaluate than cost-effectiveness in separate evaluation, and, in joint evaluation, people allocate donations based on cost-effectiveness. This effect was observed for human charities, and to a lesser extent, for animal charities.

Inefficiencies in Residency Matching Associated with Gale–Shapley Algorithms

Objective This study aimed to investigate emerging trends and increasing costs in the National Residency Matching Program (NRMP) and San Francisco Residency and Fellowship Match Services (SF Match) associated with the current applicant/program Gale–Shapley-type matching algorithms.

Design A longitudinal observational study of behavioral trends in national residency matching systems with modeling of match results with alternative parameters.

Patients and Methods We analyzed publicly available data from the SF Match and NRMP websites from 1985 to 2020 for trends in the total number of applicants and available positions, as well the average number of applications and interviews per applicant for multiple specialties. To understand these trends and the algorithms' effect on the residency programs and applicants, we analyzed anonymized rank list and match data for ophthalmology from the SF Match between 2011 and 2019. Match results using current match parameters, as well as under conditions in which applicant and/or program rank lists were truncated with finalized rank lists, were analyzed.

Results Both the number of applications and length of programs' rank lists have increased steadily throughout residency programs, particularly those with competitive specialties. Capping student rank lists at seven programs, or less than 80% of the average 8.9 programs currently ranked, results in a 0.71% decrease in the total number of positions filled. Similarly, capping program rank lists at seven applicants per spot, or less than 60% of the average 11.5 applicants ranked per spot, results in a 5% decrease in the total number of positions filled.

Conclusion While the number of ophthalmology positions in the United States has increased only modestly, the number of applications under consideration has increased substantially over the past two decades. The current study suggests that both programs and applicants rank more choices than are required for a nearly complete and stable match, creating excess cost and work for both applicants and programs. “Stable-marriage” type algorithms induce applicants and programs to rank as many counterparties as possible to maximize individual chances of optimizing the match.

Self-reported wellbeing indicators are a valuable complement to traditional economic indicators but are not yet ready to compete with them

We join the call for governments to routinely collect survey-based measures of self-reported wellbeing and for researchers to study them. We list a number of challenges that have to be overcome in order for these measures to eventually achieve a status that is competitive with traditional economic indicators. We discuss in more detail one of the challenges, comprehensiveness: single-question wellbeing measures do not seem to fully capture what people care about. We briefly review the existing evidence, suggesting that survey respondents, when asked to make real or hypothetical trade-offs, would not always choose to maximize their predicted response to single-question wellbeing measures. The deviations appear systematic, and they persist under conditions where alternative explanations are less plausible. We also review an approach for combining single-question measures into a more comprehensive wellbeing index - an approach that itself is not free of ongoing theoretical and implementational challenges, but that we view as a promising direction.

An experimental investigation of preference misrepresentation in the residency match

Policymakers increasingly rely on matching algorithms to assign students to schools. Common algorithms can be “gamed” by students misrepresenting their preferences for schools, resulting in assignments that are unduly influenced by application strategies. In strategy-proof algorithms that incentivize students to tell the truth, this undesirable influence of strategic sophistication is argued to be eliminated. We conduct an online experiment among participants in a leading exemplar of strategy-proof market design: the assignment of new doctors to medical residencies. Our results suggest that many market participants do not understand that telling the truth is optimal. This illustrates that strategy-proof environments are not immune to the influence of strategic sophistication, and that practical tensions arise when using complex means to implement simple incentives.

The development and deployment of matching procedures that incentivize truthful preference reporting is considered one of the major successes of market design research. In this study, we test the degree to which these procedures succeed in eliminating preference misrepresentation. We administered an online experiment to 1,714 medical students immediately after their participation in the medical residency match—a leading field application of strategy-proof market design. When placed in an analogous, incentivized matching task, we find that 23% of participants misrepresent their preferences. We explore the factors that predict preference misrepresentation, including cognitive ability, strategic positioning, overconfidence, expectations, advice, and trust. We discuss the implications of this behavior for the design of allocation mechanisms and the social welfare in markets that use them.

What do self-reports of wellbeing say about life-cycle theory and policy?

I respond to Atkinson's plea to revive welfare economics, and to considering alternative ethical frameworks when making policy recommendations. I examine a measure of self-reported evaluative wellbeing, the Cantril Ladder, and use data from Gallup to examine wellbeing over the life-cycle. I assess the validity of the measure, and show that it is hard to reconcile with familiar theories of intertemporal choice. I find a worldwide optimism about the future; in spite of repeated evidence to the contrary, people consistently but irrationally predict they will be better off five years from now. The gap between future and current wellbeing diminishes with age, and in rich countries, is negative among the elderly. I also use the measure to think about income transfers by age and sex. Policies that give priority those with low incomes favor the young and the old, while utilitarian policies favor the middle aged, and men over women.

The Asymmetric Experience of Positive and Negative Economic Growth: Global Evidence Using Subjective Well-Being Data

Are individuals more sensitive to losses than gains in terms of economic growth? We find that measures of subjective well-being are more than twice as sensitive to negative as compared to positive economic growth. We use Gallup World Poll data from over 150 countries, BRFSS data on 2.3 million US respondents, and Eurobarometer data that cover multiple business cycles over four decades. This research provides a new perspective on the welfare cost of business cycles, with implications for growth policy and the nature of the long-run relationship between GDP and subjective well-being.

A New Look at the Impact of Maximizing on Unhappiness: Two Competing Mediating Effects

The current study aims to explore how the decision-making style of maximizing affects subjective well-being (SWB), which mainly focuses on the confirmation of the mediator role of regret and suppressing role of achievement motivation. A total of 402 Chinese undergraduate students participated in this study, in which they responded to the maximization, regret, and achievement motivation scales and SWB measures. Results suggested that maximizing significantly predicted SWB. Moreover, regret and achievement motivation (hope for success dimension) could completely mediate and suppress this effect. That is, two competing indirect pathways exist between maximizing and SWB. One pathway is through regret. Maximizing typically leads one to regret, which could negatively predict SWB. Alternatively, maximizing could lead to high levels of hope for success, which were positively correlated with SWB. Findings offered a complex method of thinking about the relationship between maximizing and SWB.

Creative Destruction and Subjective Well-Being

In this paper we analyze the relationship between turnover-driven growth and subjective wellbeing. Our model of innovation-led growth and unemployment predicts that: (i) the effect of creative destruction on expected individual welfare should be unambiguously positive if we control for unemployment, less so if we do not; (ii) job creation has a positive and job destruction has a negative impact on wellbeing; (iii) job destruction has a less negative impact in US Metropolitan Statistical Areas (MSA) within states with more generous unemployment insurance policies; (iv) job creation has a more positive effect on individuals that are more forward-looking. The empirical analysis using cross-sectional MSA-level and individual-level data provide empirical support to these predictions.

Models of Affective Decision Making: How Do Feelings Predict Choice?

Intuitively, how you feel about potential outcomes will determine your decisions. Indeed, an implicit assumption in one of the most influential theories in psychology, prospect theory, is that feelings govern choice. Surprisingly, however, very little is known about the rules by which feelings are transformed into decisions. Here, we specified a computational model that used feelings to predict choices. We found that this model predicted choice better than existing value-based models, showing a unique contribution of feelings to decisions, over and above value. Similar to the value function in prospect theory, our feeling function showed diminished sensitivity to outcomes as value increased. However, loss aversion in choice was explained by an asymmetry in how feelings about losses and gains were weighted when making a decision, not by an asymmetry in the feelings themselves. The results provide new insights into how feelings are utilized to reach a decision.

An anatomy of old-age disability: Time use, affect and experienced utility

Complementing the commonly used concepts of evaluative wellbeing and decision utility, emotional wellbeing and experienced utility are important welfare criteria to assess individuals' subjective wellbeing, especially for valuing health and disability. Yet, almost all empirical evidences on the link between disability and experienced wellbeing come from developed countries. This paper studies the relationship between old-age disability and experienced utility in five low- and middle-income countries. Using data on individual time use and activity-specific affective experiences from an abbreviated version of the Day Reconstruction Method, we document a strong negative association between disability and experienced utility. These differences in experienced utility by disability status are exclusively due to worse activity-specific affective experiences among persons with disabilities. By contrast, disability-related differences in time use provide small compensating effects. Interventions or technologies that facilitate daily life hold most promise to improve experienced utility among persons with disabilities in the developing world.

COGNITIVE ECONOMICS

Cognitive economics is the economics of what is in people's minds. It is a vibrant area of research (much of it within behavioural economics, labour economics and the economics of education) that brings into play novel types of data, especially novel types of survey data. Such data highlight the importance of heterogeneity across individuals and highlight thorny issues for welfare economics. A key theme of cognitive economics is finite cognition (often misleadingly called "bounded rationality"), which poses theoretical challenges that call for versatile approaches. Cognitive economics brings a rich toolbox to the task of understanding a complex world.

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

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.

Beyond Happiness and Satisfaction: Toward Well-Being Indices Based on Stated Preference

This paper proposes foundations and a methodology for survey-based tracking of well-being. First, we develop a theory in which utility depends on "fundamental aspects" of well-being, measurable with surveys. Second, drawing from psychologists, philosophers, and economists, we compile a comprehensive list of such aspects. Third, we demonstrate our proposed method for estimating the aspects' relative marginal utilities-a necessary input for constructing an individual-level well-being index-by asking ~4,600 U.S. survey respondents to state their preference between pairs of aspect bundles. We estimate high relative marginal utilities for aspects related to family, health, security, values, freedom, happiness, and life satisfaction.

Evaluative and hedonic wellbeing among those with and without children at home

We document and interpret differences in life evaluation and in hedonic experience between those who live with children and those who do not; most previous literature has concluded that those with children have worse lives. For a sample of 1.8 million Americans of all ages, and without controls for other circumstances, we find little difference in subjective wellbeing between people with and without children. Among those most likely to be parents, life evaluation and all hedonic experiences except stress are markedly better among those living with a child. However, within this group, people who live with children are more likely to be married, richer, better educated, more religious, and healthier, all of which have well-documented positive associations with evaluative and hedonic wellbeing. With statistical controls for these background factors, the presence of a child has a small negative association with life evaluation, although it is associated with more of both positive and negative hedonics. These patterns are replicated in the English-speaking countries of the world, but not in other regions. We argue that the causal effect of children on parental wellbeing, which is the target for most of the literature, is not well defined. Instead, we interpret our rich-country results within a theory of children and wellbeing in which adults sort into parenthood according to their preferences. In poor, high-fertility countries, we find evidence that at least some people have children even when it diminishes their personal wellbeing.

Aggregating Local Preferences to Guide Marginal Policy Adjustments

We propose a social choice rule for aggregating preferences elicited from surveys into a marginal adjustment of policy from the status quo. The mechanism is: (i) symmetric in its treatment of survey respondents; (ii) ordinal, using only the orientation of respondents' indifference surfaces; (iii) local, using only preferences in the neighborhood of current policy; and (iv) what we call “first-order strategy-proof,” making the gains from misreporting preferences second order. The mechanism could be applied to guide policy based on how policy affects responses to subjective well-being surveys.