Please use this identifier to cite or link to this item: http://hdl.handle.net/1893/17066
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
Banks, James
Clark, Andrew E
Brown, Gordon D A
Contact Email: christopher.boyce@stir.ac.uk
Keywords: loss aversion
money
income
happiness
subjective well-being
Issue Date: Dec-2013
Publisher: SAGE
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.
Type: Journal Article
URI: http://hdl.handle.net/1893/17066
DOI Link: http://dx.doi.org/10.1177/0956797613496436
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
Affiliation: Economics
Management Work and Organisation
University of Manchester
Paris School of Economics
University of Warwick

Files in This Item:
File Description SizeFormat 
Loss Aversion - Boyce et al. PsychScience_version before review.pdf591.3 kBAdobe PDFView/Open


This item is protected by original copyright



Items in the Repository are protected by copyright, with all rights reserved, unless otherwise indicated.

If you believe that any material held in STORRE infringes copyright, please contact library@stir.ac.uk providing details and we will remove the Work from public display in STORRE and investigate your claim.