CDR, Economics and 'Cities Theme' Seminar: Reto Odermatt - Know thyself? (Mis-)predicted subjective well-being following major life changes

Abstract

We test the assumption that people correctly predict how alternative states of the world affect their lives - a cornerstone of economics. While several studies have shown that people adapt to major life changes to a certain degree, it remains unanswered to what extent people foresee their pattern of adjustment. Using large-scale long-run panel data on predicted satisfaction with life, we test the accuracy of people’s expectations regarding their long-term satisfaction changes by examining different major events in people’s lives, such as widowhood, marriage, unemployment, disability, or becoming homeowner. Our results show that people commit sizable prediction errors for some of these events.

About the speaker

Reto Odermatt is a visiting Postdoctoral Researcher in the Wellbeing Programme of the CEP at the LSE and Research Fellow at the Center for Research in Economics and Well-Being at the University of Basel. He holds a fellowship of the Swiss National Science Foundation. In his current research, Reto applies data on subjective well-being to study behavioural economic issues, linking the fields of economics, psychology and public policy, such as the identification of utility misprediction and the evaluation of policies in areas that might involve suboptimal behaviour.

For further information, contact research.LUBS@leeds.ac.uk.