The Half-Life of Happiness: Hedonic Adaptation in the Subjective Well-Being of Poor Slum Dwellers to a Large Improvement in Housing

Sebastian Galiani, Paul J. Gertler, Raimundo Undurraga

NBER Working Paper No. 21098
Issued in April 2015, Revised in March 2016
NBER Program(s):Development Economics

Subjective well-being may not improve in step with increases in material well-being due to hedonic adaptation, a psychological process that attenuates the long-term emotional impact of a favorable or unfavorable change in circumstances, such that people’s happiness eventually returns to a stable reference level. We use a multi-country field experiment to examine the impact of the provision of improved housing to extremely poor populations on subjective measures of well-being to test whether poor populations exhibit hedonic adaptation when their basic housing needs are met. After sixteen months, we find that subjective perceptions of well-being improve substantially for recipients of better housing but that after, on average, eight additional months, 60% of that gain disappears.

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Document Object Identifier (DOI): 10.3386/w21098

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