IZA DP No. 3344: On the Curvature of the Reporting Function from Objective Reality to Subjective Feelings
published in: Economics Letters, 2008, 100 (3), 369-372
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.