Survey
* Your assessment is very important for improving the work of artificial intelligence, which forms the content of this project
Download Behavioral Finance: Happiness
Document related concepts
no text concepts found
Transcript
Teaching Evaluations Please do fill your teaching evaluations 25 minutes of your time could be 25 minutes well spent and very much appreciated www.Ratemyprofessors.com www.Studentsreview.com www.myprofessorsucks.com 1 Behavioral Finance 5/23/2017 Happiness What makes us happy? Do we really know what makes us happy? How to be happier Money and Happiness 2 Behavioral Finance 5/23/2017 Happiness across the world Also, it seems like American men got happier, but American women did not 3 Behavioral Finance 5/23/2017 Does Wealth Make Us Happy? Wealth? 4 Behavioral Finance 5/23/2017 Income and Happiness Real Income Per Head 300 100% 75% 200 150 50% 100 25% 50 0 0% Percentage Very Happy Real Income (1945=100) 250 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 The belief is that by raising its output and productivity a society truly betters itself … The truth is individual happiness appears to be the same across poor countries and rich countries, additionally economic growth does not raise well-being: once the GDP per capita increases above about 12K $/ year there’s barely increase in happiness. 5 Behavioral Finance 5/23/2017 Employment and Happiness Unemployed feel much less satisfied with life. However, the decrease in well-being comes not from losing one’s job and drop in take-home income, but rather a nonpecuniary distress. 6 Behavioral Finance 5/23/2017 If you are so rich why commit suicide? Denmark: 1/3.000 deaths; Britain: 1/12.000; USA: 1/7.000 In Britain a fifth of all emergency admissions to hospital are du to para-suicide (suicide which did not work out); between 8 to 20 times more common the successful suicide. At the same time suicidal rates about halved in Britain between 1911 and 1990. Joblessness is the main cause of suicide: 1.345/100.000 vs 114/100.000 for employed 7 Behavioral Finance 5/23/2017 Job Satisfaction and Happiness Job satisfaction has not increased in US and UK over time 8 Behavioral Finance 5/23/2017 Why Wealth Does not Make Us Happy 1) Happiness is a relative phenomenon. Earning more or less does not matter in isolation; what is important is how much you earn relatively to your neighbors. As the wealth of the economy increases the relative ranking of people in the economy does not change. 2) individuals adapt to materials goods and, some argue, that material goods yield little joy for most individuals. Thus, increases in incomes have little long-lasting effects above certain levels of consumption. 3) As income raises peoples time use does not appear to shift toward activities that are associated with improved affect. Subjective well-being is related to how people spend their time. People with greater income tend to devote relatively more time to their work., compulsory non-work activities (such as shopping and childcare), and active leisure (such as exercise) and less of their time to passive leisure activities (such as watching TV). Thus the activities that higher-income individuals spend relatively more their time engaged in are associated with no greater happiness, on average, but with slightly higher tension and stress. 9 Behavioral Finance 5/23/2017 How to Spend Your Time to Be Happier Percentage of Time Unhappy (U-index) 27.8% 19.4% 14.9% 10 10.9% 11.0% 11.4% Passive leisure Engaged leisure Eating Talking Behavioral Finance Home Work and compulsory commute 5/23/2017 Does Marriage Make Us Happy? Wealth? Marriage? 11 Behavioral Finance 5/23/2017 Marriage and Happiness 100% Life Satisfaction 80% 60% 40% 20% 0% -4 -3 -2 -1 0 1 2 3 4 5+ Years Relative to Marriage 12 Behavioral Finance 5/23/2017 Does Youth Make Us Happy? Youth? Wealth? Marriage? 13 Behavioral Finance 5/23/2017 Youth and Happiness 14 Behavioral Finance 5/23/2017 Does Education Make Us Happy? Youth? Wealth? Marriage? 15 Behavioral Finance Education? 5/23/2017 Education and Happiness There is no effect on happiness across countries and only a small effect within countries 16 Behavioral Finance 5/23/2017 Do Looks Make Us Happy? Youth? Wealth? Marriage? Education? Looks? 17 Behavioral Finance 5/23/2017 Looks and Happiness Looks don’t make us happy after taking away the hair, makeup, jewelry and nice clothing 18 Behavioral Finance 5/23/2017 Does Gender Have Effect on Happiness? Youth? Wealth? Marriage? Education? Looks? Gender? 19 Behavioral Finance 5/23/2017 Gender and Happiness Men are more prone to alcoholism, while women to depression 20 Behavioral Finance 5/23/2017 Does Religion Make Us Happy? Youth? Wealth? Marriage? Looks? Education? Religion? Gender? 21 Behavioral Finance 5/23/2017 Religion and Happiness Religion does make us happy…but why? Is it the “God” part which makes us happy, or the “community” part? 22 Behavioral Finance 5/23/2017 Does Family Make Us Happy? Youth? Wealth? Marriage? Looks? Education? Religion? Gender? 23 Behavioral Finance Family? 5/23/2017 Family and Happiness People with the highest levels of happiness have strong social relationships 24 Behavioral Finance 5/23/2017 Do These Things Make Us Happy? Youth? Wealth? Marriage? Looks? Education? Religion? Gender? 25 Behavioral Finance Family? 5/23/2017 Long Term vs. Short Term Happiness Life satisfaction vs. experienced happiness: “In the moment” and “Morning after” have very different levels of happiness Momentary happiness and life satisfaction could be dramatically different too Obese people love to eat the food they do…but are not happy with their overall life 26 Behavioral Finance 5/23/2017 The Focusing Illusion We fail to recognize that people do not continuously think about their circumstances, whether positive or negative As a result, we tend to exaggerate the effect of various circumstances on well-being Paraplegics are not as miserable as you think and lottery winners are not as happy as you think 27 Behavioral Finance 5/23/2017 What We’ve Learned So FAr What makes us happy? Do we know what makes us happy? How to be happier 28 How to spend your time Positive psychology Behavioral Finance 5/23/2017 Money and Happiness: Economist Advice More is Better! 29 Behavioral Finance 5/23/2017 Money and Happiness: Alternative View One analogy A person that loves wooden blocks becomes bored playing with the ones he has had for a while How can we make him happier? 30 A solution from Economics: Acquire more blocks! A solution from Hedonomics: Learn to combine the blocks in new and more satisfying ways! Behavioral Finance 5/23/2017 Choose a reference point wisely Changing reference points can change the way you perceive your wellbeing: Don’t compare yourself to your BA classmates…but your high school classmates Reference point can be real or counterfactual: Are Olympic bronze medalists happier than silver medalists? 31 Behavioral Finance 5/23/2017 More Happiness Can Be Achieved with Same Money Consider opportunity costs 32 BMW X3 and Free Gas for 7 Years BMW X5 $46,200 $46,200 Behavioral Finance 5/23/2017 Investment can be fun Create multiple accounts Nest-egg account managed by professionals and kept largely out of sight Have fun account managed by investor with low transactions costs and lots of feedback (although perhaps with limits on leverage and non-zero liability investments) Potential benefits of these accounts: Investors get to have fun (and possibly make some money) At the same time, they are protected from the downside of the natural desire to meddle 33 Behavioral Finance 5/23/2017
