|Appears in Collections:||Economics Journal Articles|
|Peer Review Status:||Refereed|
|Title:||Money, Well-Being, and Loss Aversion: Does an Income Loss Have a Greater Effect on Well-Being Than an Equivalent Income Gain?|
|Authors:||Boyce, Christopher J|
Wood, Alex M
Clark, Andrew E
Brown, Gordon D A
|Citation:||Boyce CJ, Wood AM, Banks J, Clark AE & Brown GDA (2013) Money, Well-Being, and Loss Aversion: Does an Income Loss Have a Greater Effect on Well-Being Than an Equivalent Income Gain?, Psychological Science, 24 (12), pp. 2557-2562.|
|Abstract:||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.|
|Rights:||Publisher policy allows this work to be made available in this repository. Published in Psychological Science December 2013 vol. 24 no. 12 2557-2562 by SAGE. The original publication is available at: http://pss.sagepub.com/content/24/12/2557|
|Loss Aversion - Boyce et al. PsychScience_version before review.pdf||591.3 kB||Adobe PDF||View/Open|
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