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Happiness as a Driver of Risk-Avoiding Behavior

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  • Jan-Emmanuel De Neve
  • Robert J. B. Goudie
  • Sach Mukherjee
  • Andrew J. Oswald
  • Stephen Wu

Abstract

Most governments try to discourage their citizens from taking extreme risks with their health and lives. Yet, for reasons not understood, many people continue to do so. We suggest a new approach to this longstanding question. First, we show that expected-utility theory predicts that 'happier' people will be less attracted to risky behaviors. Second, using BRFSS data on seatbelt use in a sample of 300,000 Americans, we document evidence strongly consistent with that prediction. Our result is demonstrated with various methodological approaches, including Bayesian model-selection and instrumental-variable estimation (based on unhappiness caused by widowhood). Third, using data on road accidents from the Add Health data set, we find strongly corroborative longitudinal evidence. These results suggest that government policy may need to address the underlying happiness of individuals rather than focus on behavioural symptoms.

Suggested Citation

  • Jan-Emmanuel De Neve & Robert J. B. Goudie & Sach Mukherjee & Andrew J. Oswald & Stephen Wu, 2012. "Happiness as a Driver of Risk-Avoiding Behavior," CEP Discussion Papers dp1126, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1126
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    Cited by:

    1. De Neve, Jan-Emmanuel & Oswald, Andrew J., 2012. "Estimating the influence of life satisfaction and positive affect on later income using sibling fixed-effects," LSE Research Online Documents on Economics 51523, London School of Economics and Political Science, LSE Library.
    2. Drouvelis, Michalis & Powdthavee, Nattavudh, 2013. "Are happier people less judgmental of other people's selfish behaviors? Laboratory evidence from trust and gift exchange games," LSE Research Online Documents on Economics 51573, London School of Economics and Political Science, LSE Library.
    3. Armando N. Meier, 2019. "Emotions, Risk Attitudes, and Patience," SOEPpapers on Multidisciplinary Panel Data Research 1041, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. Abel Brodeur & Sarah Flèche, 2013. "Where the Streets Have a Name: Income Comparisons in the US," CEP Discussion Papers dp1196, Centre for Economic Performance, LSE.
    5. L. Lambert D’raven & N. Pasha-Zaidi, 2016. "Using the PERMA Model in the United Arab Emirates," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(3), pages 905-933, February.
    6. Dezhu Ye & Yew-Kwang Ng & Yujun Lian, 2015. "Culture and Happiness," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 123(2), pages 519-547, September.
    7. Powdthavee, Nattavudh & Stutzer, Alois, 2014. "Economic Approaches to Understanding Change in Happiness," IZA Discussion Papers 8131, Institute of Labor Economics (IZA).
    8. Krause, Annabelle, 2013. "Don’t worry, be happy? Happiness and reemployment," Journal of Economic Behavior & Organization, Elsevier, vol. 96(C), pages 1-20.
    9. L. Lambert & H.-A. Passmore & M. Joshanloo, 2019. "A Positive Psychology Intervention Program in a Culturally-Diverse University: Boosting Happiness and Reducing Fear," Journal of Happiness Studies, Springer, vol. 20(4), pages 1141-1162, April.
    10. Ruut Veenhoven, 2015. "Informed Pursuit of Happiness: What we should know, do know and can get to know," Journal of Happiness Studies, Springer, vol. 16(4), pages 1035-1071, August.
    11. Swee, Eik Leong & Zhan, Haikun & Powdthavee, Nattavudh, 2021. "Do perceptions of economic well-being predict the onset of war and peace?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 95(C).
    12. Yuxiang Hong & Jong-Suk Kim & Joo-Heon Lee, 2020. "How Does the Quality of Life Affect Individuals’ Disaster Preparedness Behaviors? A Moderated Mediation Model-Based Case Study," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 148(3), pages 1039-1052, April.
    13. Ruohong Cai & Neli Esipova & Michael Oppenheimer & Shuaizhang Feng, 2014. "International migration desires related to subjective well-being," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-20, December.
    14. Jan-Emmanuel De Neve & Ed Diener & Louis Tay & Cody Xuereb, 2013. "The Objective Benefits of Subjective Well-Being," CEP Discussion Papers dp1236, Centre for Economic Performance, LSE.

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    More about this item

    Keywords

    subjective well-being; risky behaviors; effects of well-being; rational carelessness;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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