Money, Well-Being, and Loss Aversion: Does an Income Loss Have a Greater Effect on Well-Being Than an Equivalent Income Gain?
Higher income is associated with greater well-being, but do income gains and losses affect well-being differently? Loss aversion, whereby losses loom larger than gains, is typically examined in relation to decisions about anticipated outcomes. Here, using subjective-well-being data from Germany (N =...
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| Veröffentlicht in: | Psychological science 2013-12, Vol.24 (12), p.2557-2562 |
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| creator | Boyce, Christopher J. Wood, Alex M. Banks, James Clark, Andrew E. Brown, Gordon D. A. |
| description | Higher income is associated with greater well-being, but do income gains and losses affect well-being differently? Loss aversion, whereby losses loom larger than gains, is typically examined in relation to decisions about anticipated outcomes. Here, using subjective-well-being data from Germany (N = 28,723) and the United Kingdom (N = 20,570), we found that losses in income have a larger effect on well-being than equivalent income gains and that this effect is not explained by diminishing marginal benefits of income to well-being. Our findings show that loss aversion applies to experienced losses, challenging suggestions that loss aversion is only an affective-forecasting error. By failing to account for loss aversion, longitudinal studies of the relationship between income and well-being may have overestimated the positive effect of income on well-being. Moreover, societal well-being might best be served by small and stable income increases, even if such stability impairs long-term income growth. |
| doi_str_mv | 10.1177/0956797613496436 |
| format | Article |
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By failing to account for loss aversion, longitudinal studies of the relationship between income and well-being may have overestimated the positive effect of income on well-being. Moreover, societal well-being might best be served by small and stable income increases, even if such stability impairs long-term income growth.</description><subject>Adolescent</subject><subject>Adult</subject><subject>Affect</subject><subject>Aged</subject><subject>Aged, 80 and over</subject><subject>Applied psychology</subject><subject>Biological and medical sciences</subject><subject>Correlation analysis</subject><subject>Decision making</subject><subject>Economic models</subject><subject>Economics and Finance</subject><subject>Female</subject><subject>Forecasting</subject><subject>Fundamental and applied biological sciences. Psychology</subject><subject>Germany</subject><subject>Happiness</subject><subject>Humanities and Social Sciences</subject><subject>Humans</subject><subject>Income</subject><subject>Male</subject><subject>Middle Aged</subject><subject>Miscellaneous</subject><subject>Money</subject><subject>Personal Satisfaction</subject><subject>Psychological factors</subject><subject>Psychology. Psychoanalysis. Psychiatry</subject><subject>Psychology. 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| subjects | Adolescent Adult Affect Aged Aged, 80 and over Applied psychology Biological and medical sciences Correlation analysis Decision making Economic models Economics and Finance Female Forecasting Fundamental and applied biological sciences. Psychology Germany Happiness Humanities and Social Sciences Humans Income Male Middle Aged Miscellaneous Money Personal Satisfaction Psychological factors Psychology. Psychoanalysis. Psychiatry Psychology. Psychophysiology Quality of life Research Report Risk aversion United Kingdom Well being Young Adult |
| title | Money, Well-Being, and Loss Aversion: Does an Income Loss Have a Greater Effect on Well-Being Than an Equivalent Income Gain? |
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