Economics ignores the possibility of hedonic adaptation (the idea that people bounce back from utility shocks). This paper argues that economists are wrong to do so. It provides longitudinal evidence that individuals who become disabled go on to exhibit recovery in mental wellbeing. Adaptation...

Economics ignores the possibility of hedonic adaptation (the idea that people bounce back from utility shocks). This paper argues that economists are wrong to do so. It provides longitudinal evidence that individuals who become disabled go on to exhibit recovery in mental wellbeing. Adaptation...

I suggest the idea of a reporting function, r(.), from reality to feelings. The 'happiness' literature claims we have demonstrated diminishing marginal utility of income. I show not, and that knowing r(.)'s curvature is crucial. A quasi-experiment on heights is studied. -- Money ; diminishing...