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Do larger incomes make people happier? Two authors of the present paper have published contradictory answers. Using dichotomous questions about the preceding day, [Kahneman and Deaton, Proc. Natl. Acad. Sci. U.S.A. 107 , 16489–16493 (2010)] reported a flattening pattern: happiness increased steadily with log(income) up to a threshold and then plateaued. Using experience sampling with a continuous scale, [Killingsworth, Proc. Natl. Acad. Sci. U.S.A. 118 , e2016976118 (2021)] reported a linear-log pattern in which average happiness rose consistently with log(income). We engaged in an adversarial collaboration to search for a coherent interpretation of both studies. A reanalysis of Killingsworth’s experienced sampling data confirmed the flattening pattern only for the least happy people. Happiness increases steadily with log(income) among happier people, and even accelerates in the happiest group. Complementary nonlinearities contribute to the overall linear-log relationship. We then explain why Kahneman and Deaton overstated the flattening pattern and why Killingsworth failed to find it. We suggest that Kahneman and Deaton might have reached the correct conclusion if they had described their results in terms of unhappiness rather than happiness; their measures could not discriminate among degrees of happiness because of a ceiling effect. The authors of both studies failed to anticipate that increased income is associated with systematic changes in the shape of the happiness distribution. The mislabeling of the dependent variable and the incorrect assumption of homogeneity were consequences of practices that are standard in social science but should be questioned more often. We flag the benefits of adversarial collaboration.

Human behavior is a diverse, complex, and highly interesting phenomenon. Despite the many differences that exist between any two people, we can find patterns that characterize typical behaviors in various situations, such as in a classroom or at a family dinner. The research field called behavioral economics studies human behavior in financial situations. In this article, I will present the main findings of the prospect theory, which I developed together with the late Amos Tversky. Prospect theory explains human choices in situations that involve gambling, and it answers questions such as whether people consider gains and losses equally and how a person’s initial financial situation influences the value they give to gains and losses. At the end of the article, I will share important insights from my scientific career and explain why happiness has two faces.

The psychologist Anne Treisman dedicated her career to the study of attention and perception, a central concern of cognitive science. While still a graduate student, she modified and reformulated the leading theory of auditory attention. Her discoveries and insights into the role of visual attention in the perception of objects, to which she devoted her subsequent decades of research, have had a lasting influence, not only in experimental psychology but also in vision research, neuroscience and artificial intelligence. In a period of rising interest in the brain, her foundational theories inspired thousands of experiments in her own field and others, and the originality and precision of her experimental design confirmed the continued relevance of behavioural research to the scientific enterprise. Treisman's accomplishments were recognized by the National Academy of Sciences in the USA in 1994 and by the American Academy of Arts and Sciences in 1995. In 1996, she became the first psychologist to win the Golden Brain Award. She received the University of Louisville Grawemeyer Award in Psychology in 2009, and was awarded the National Medal of Science by President Barack Obama at a White House ceremony in 2013.

Reports in the 1970s of cognitive illusions in judgments of uncertainty had been anticipated by Laplace 150 years earlier. We discuss Miller and Gelman’s remark that Laplace’s anticipation of the main ideas of the heuristics and biases approach “gives us a new perspective on these ideas as more universal and less contingent on particular developments [that came much] later.”

Respondents were shown brief statements ("headlines") referring to various threats to the environment or to public health, and other public issues. An intervention to deal with each problem was also introduced by a single sentence. Some respondents were asked to indicate their willingness to pay for the interventions by voluntary contributions. Others indicated their opinion of the intervention on a conventional rating scale, rated the personal satisfaction of contributing to it, or rated the importance of the problem. Group averages of these response measures were obtained for a large set of issues. Computed over issues, the rank-order correlations between the different measures were very high, suggesting that group averages of WTP and of other opinion statements are measures of the same public attitudes. Observed preference reversals and violations of monotonicity in contributions are better explained by a concept of attitude than by the notion of economic value that underlies the contingent valuation method. Contributions and purchases do not follow the same logic. Possible implications for the contingent valuation method are discussed.

The difficulties of decision making on complex problems, especially when the negative consequences of a faulty decision would weigh so heavily on mans future, were highlighted by Daniel Kahneman, professor of psychology at the Hebrew University, Pointing out the dangers to society in man's cognitive limitations, Kahneman called for a new technical discipline that he labeled "human engineering of decisions which would employ technology in such a way as to enhance human intuition.

The chapter develops the theme that the concept of perceptual object and the rules of grouping and organization are essential to describe the abilities and limitations of selective attention. Attention can only be directed to preattentively defined perceptual objects, and it facilitates all the responses associated with properties or elements of the selected object. Evidence is presented from studies of the Stroop task, effects of visual grouping on recall, search and selective attention in tachistoscopic displays, and the visual and auditory suffix effects. A theoretical analysis of perceptual objects is outlined, in which perceptual identity is distinguished from the process of identification.

While direct replications such as the “Many Labs” project are extremely valuable in testing the reliability of published findings across laboratories, they reflect the common reliance in psychology on single vignettes or stimuli, which limits the scope of the conclusions that can be reached. New experimental tools and statistical techniques make it easier to routinely sample stimuli, and to appropriately treat them as random factors. We encourage researchers to get into the habit of including multiple versions of the content (e.g., stimuli or vignettes) in their designs, to increase confidence in cross-stimulus generalization and to yield more realistic estimates of effect size. We call on editors to be aware of the challenges inherent in such stimulus sampling, to expect and tolerate unexplained variability in observed effect size between stimuli, and to encourage stimulus sampling instead of the deceptively cleaner picture offered by the current reliance on single stimuli.

What is the origin and nature of consciousness? If consciousness is common to humans and animals alike, what are the defining traits of human consciousness? Moderated by Steve Paulson, executive producer and host of To the Best of Our Knowledge, Nobel laureate psychologist Daniel Kahneman, philosopher David Chalmers, expert in primate cognition Laurie Santos, and physician-scientist Nicholas Schiff discuss what it means to be conscious and examine the human capacities displayed in cognitive, aesthetic, and ethical behaviors, with a focus on the place and function of the mind within nature. The following is an edited transcript of the discussion that occurred October 10, 2012, 7:00-8:15 PM, at the New York Academy of Sciences in New York City.

Psychological biases strongly affect foreign policy decision-making. The authors argue that the biases recently uncovered by psychological research favor hawkish decisions in conflict situations. By “hawkish,” they refer to a propensity for suspicion, hostility and aggression in the conduct of conflict, and for less cooperation and trust when the resolution of a conflict is on the agenda. While much extant work examines links between cognitive biases and conflict, they offer a new and developed formulation based on the excellent insight of Nobel Prize winner Daniel Kahneman in the field of psychology and Jonathan Renshon’s knowledge of IR and conflict.

Dual-system models of reasoning attribute errors of judgment to two failures: the automatic operations of a ‘System 1' generate a faulty intuition, which the controlled operations of a ‘System 2' fail to detect and correct. We identify System 1 with the automatic operations of associative memory and draw on research in the priming paradigm to describe how it operates. We explain how three features of associative memory – associative coherence, attribute substitution and processing fluency – give rise to major biases of intuitive judgment. Our article highlights both the ability of System 1 to create complex and skilled judgments and the role of the system as a source of judgment errors.

Intense pain is often exaggerated in retrospective evaluations, indicating a possible divergence between experience and memory. However, little is known regarding how people retrospectively evaluate experiences with both pleasant and unpleasant aspects. The Day Reconstruction Method (DRM; Kahneman. Krueger, Schkade, Schwarz, & Stone, 2004b) provides a unique opportunity to examine memory-experience gaps in recollections of individual days, which elicit a wide gamut of emotions. We asked female participants (N = 810, Study 1, and N = 615, Study 2) to reconstruct episodes of the previous day using the DRM and demonstrated that memory and experience diverge for both pleasant and unpleasant emotions. When they rated their day overall in a retrospectively evaluative frame of mind, the participants recalled more unpleasant and pleasant emotions than they reported feeling during the individual episodes, with a larger gap for unpleasant emotions than for pleasant emotions. The findings suggest that separate processes are used for committing positive and negative events to memory and that, especially when unpleasant emotions are involved, prudence is favored over accuracy.

Social scientists and policymakers have long been interested in comparing the subjectivewell-being (SWB) of populations over time and across countries, although SWB is hard todefine and measure. Nevertheless, attempts have been made to rank countries based onSWB (e.g., Veenhoven 1996; OECD 2005). Cross-country data have also been used tostudy the effect on SWB of public policies, economic conditions and institutions (e.g.,Alesina et al. 2002; Frey and Stutzer 2002; Blanchflower 2007). The most commonmeasure of SWB in these studies is based on a question that asks respondents about theiroverall level of life satisfaction or happiness. Other measures of SWB include ecologicalmomentary assessment (EMA; Stone et al. 1999) and the day reconstruction method(DRM; Kahneman et al. 2004). These measures collect individuals’ time use and affectiveexperience over time, either using real-time data collection or diary recall methods. Anadvantage of such time-based SWB data is that they connect individuals’ reported SWB toactual events that occurred in their lives, but these measures have not been used previouslyin cross-country studies.

The term 'utility' can be interpreted in terms of the hedonic experience of an outcome (experienced utility) or in terms of the preference or desire for that outcome (decision utility). It is this second interpretation that lies at the heart of the methods that economists have developed to value nonmarket goods, such as health. In this article, we argue that decision utility is unlikely to generate meaningful data on the utility associated with different experiences, and instead economists should look towards developing measures that focus more directly on experienced utility. The concept of utility is central to both normative and descriptive debates in economics. The word 'utility' has two distinct meanings: it can refer either to the hedonic experience of an outcome or to the preference or desire for that outcome. These have been labelled experienced utility and decision utility, respectively (Kahneman et al., 1997). Jeremy Bentham first defined utility in hedonic terms, as a measure of pleasure and pain (Bentham, 1789/1948), and economists followed that usage until the twentieth century. Francis Edgeworth even imagined a 'hedonimeter', an instrument that measures the utility of moments of experience and plots experienced utility as a continuous function of time (Edgeworth, 1881/1967). He proposed that the area under

Direct reports of subjective well-being may have a useful role in the measurement of consumer preferences and social welfare, if they can be done in a credible way. Can well-being be measured by a subjective survey, even approximately? In this paper, we discuss research on how individuals' responses to subjective well-being questions vary with their circumstances and other factors. We will argue that it is fruitful to distinguish among different conceptions of utility rather than presume to measure a single, unifying concept that motivates all human choices and registers all relevant feelings and experiences. While various measures of well-being are useful for some purposes, it is important to recognize that subjective well-being measures features of individuals' perceptions of their experiences, not their utility as economists typically conceive of it. Those perceptions are a more accurate gauge of actual feelings if they are reported closer to the time of, and in direct reference to, the actual experience. We conclude by proposing the U-index, a misery index of sorts, which measures the proportion of time that people spend in an unpleasant state, and has the virtue of not requiring a cardinal conception of individuals' feelings.

In this column, we discuss a version of the utility maximization hypothesis that can be tested—and we find that it is false. We review empirical challenges to utility maximization, which return to the old question of whether preferences optimize the experience of outcomes. Much of this work has focused on a necessary condition for utility-maximizing choices: an ability of economic agents to make accurate, or at least unbiased, forecasts of the hedonic outcomes of potential choices. The research we review shows that this condition is not satisfied: people do not always know what they will like; they often make systematic errors in predicting their future experience of outcomes and, as a result, fail to maximize their experienced utility. We discuss four areas in which errors of hedonic forecasting and choice have been documented: 1) where the emotional or motivational state of the agent is very different at t0 and at t1; 2) where the nature of the decision focuses attention on aspects of the outcome that will not be salient when it is actually experienced; 3) when choices are made on the basis of flawed evaluations of past experiences; and 4) when people forecast their future adjustment to new life circumstances.

To date, diurnal rhythms of emotions have been studied with real-time data collection methods mostly in relatively small samples. The Day Reconstruction Method (DRM), a new survey instrument that reconstructs the emotions of a day, is examined as a method for enabling large-scale investigations of rhythms. Diurnal cycles were observed for 12 emotion adjectives in 909 women over a working day. Bimodal patterns with peaks at noon and evenings were detected for positive emotions; peaks in negative emotions were found at mid-morning and mid-afternoon. A V-shaped pattern was found for tired and an inverted U-shaped pattern for competent. Several diurnal patterns from prior studies were replicated. The DRM appears to be a useful tool for the study of emotions.

This paper explores the possibility of basing economic appraisal on the measurement of experienced utility (utility as hedonic experience) rather than decision utility (utility as a representation of preference). Because of underestimation of the extent of hedonic adaptation to changed circumstances and because of the “focusing illusion” (exaggerating the importance of the current focus of one’s attention), individuals’ forecasts of experienced utility are subject to systematic error. Such errors induce preference anomalies which the experienced utility approach might circumvent. The “day reconstruction method” of measuring experienced utility is considered as a possible alternative to stated preference methods.

This paper reports an ‘adversarial collaboration’—a project carried out by two individuals or research groups who, having proposed conflicting hypotheses, seek to resolve their dispute. It describes an experiment which investigates whether, when individuals consider giving up money in exchange for goods, they construe money outlays as losses or as foregone gains. This issue bears on the explanation of the widely observed disparity between willingness-to-pay (WTP) and willingness-to-accept (WTA) valuations of costs and benefits, which has proved problematic for contingent valuation studies. The results of the experiment are broadly consistent with the hypothesis that money outlays are perceived as losses.

In this article, the authors propose some psychological principles to describe the boundaries of loss aversion. A key idea is that exchange goods that are given up “as intended” do not exhibit loss aversion. For example, the authors propose that money given up in purchases is not generally subject to loss aversion. The results of several experiments provide preliminary support for the hypotheses. The authors find that, consistent with prospect theory, loss aversion provides a complete account of risk aversion for risks with equal probability to win or lose. The authors propose boundaries for this result and suggest further tests of the model.

Economists have traditionally eschewed direct measures of well-being on methodological grounds: the private nature of experience and the discomfort of making interpersonal comparisons. Instead, income is often used as a proxy for opportunities and well-being. If people are not fully rational, however, their choices will not necessarily maximize their experienced utility, and increasing their opportunities will not necessarily make them better off (Kahneman, 1994; Cass R. Sunstein and Richard Thaler, 2004). Direct measures of experienced utility become particularly relevant in a context of bounded rationality. Furthermore, advances in psychology and neuroscience suggest that experienced utility and well-being can be measured with some accuracy (Kahneman et al., 1999). Robust and interpersonally consistent relationships have been observed between subjective measures of experience and both specific measures of brain function and health outcomes. In part because of these findings, economic research using subjective indicators of happiness and life satisfaction has proliferated in recent years (see Bruno Frey and Alois Stutzer [2002] for a survey). Most work on well-being uses a question on overall life satisfaction or happiness. We suggest an alternative route based on time budgets and affective ratings of experiences.

My first exposure to the psychological assumptions of economics was in a report that Bruno Frey wrote on that subject in the early 1970's. Its first or second sentence stated that the agent of economic theory is rational and selfish, and that his tastes do not change. I found this list quite startling, because I had been professionally trained as a psychologist not to believe a word of it. The gap between the assumptions of our disciplines appeared very large indeed. Has the gap been narrowed in the intervening 30 years? A search through some introductory textbooks in economics indicates that if there has been any change, it has not yet filtered down to that level: the same assumptions are still in place as the cornerstones of economic analysis. However, a behavioral approach to economics has emerged in which the assumptions are not held sacrosanct. In the following I comment selectively on the developments with regard to the three assumptions, on both sides of the disciplinary divide.

Early studies of intuitive judgment and decision making conducted with the late Amos Tversky are reviewed in the context of two related concepts: an analysis of accessibility, the ease with which thoughts come to mind; a distinction between effortless intuition and deliberate reasoning. Intuitive thoughts, like percepts, are highly accessible. Determinants and consequences of accessibility help explain the central results of prospect theory, framing effects, the heuristic process of attribute substitution, and the characteristic biases that result from the substitution of nonextensional for extensional attributes. Variations in the accessibility of rules explain the occasional corrections of intuitive judgments. The study of biases is compatible with a view of intuitive thinking and decision making as generally skilled and successful.

Daniel Kahneman received the Nobel Prize in economics sciences in 2002, December 8, Stockholm, Sweden. This article is the edited version of his Nobel Prize lecture. The author comes back to the problems he has studied with the late Amos Tversky and to debates conducting for several decades already. The statement is based on worked out together with Shane Federik the quirkiness of human judgment. Language: ru

This paper explores how people process information on low probability-high consequence negative events and what it will take to get individuals to be sensitive to the likelihood of these types of accidents or disasters. In a set of experiments, information is presented to individuals on the likelihood of serious accidents from a chemical facility. Comparisons are made with other risks, such as fatalities from automobile accidents, to see whether laypersons can determine the relative safety of different plants. We conclude that fairly rich context information must be available for people to be able to judge differences between low probabilities. In particular, it appears that one needs to present comparison scenarios that are located on the probability scale to evoke people's own feelings of risk. The concept of evaluability recently introduced by Hsee and his colleagues provides a useful explanation of these findings.

Within the classic anchoring paradigm, in which respondents are forced to consider provided numbers as possible responses to a target judgment, Wegener et al. (2008) proposed that cognitive load affects the psychological mechanism by which these anchors influence judgments. We propose, instead, that level of cognitive resources does not fundamentally affect how anchoring works, but only whether respondents can access other considerations that bear on the target judgment. Though we share the authors' view that environmental circumstances can influence the relative contribution of associative and deliberative inputs in judgments, we contend that cognitive load primarily affects the types of information that respondents consider, not the manner by which a focal element is processed.

This study extends Loewenstein's (1987) notions of savoring and dread to the domain of uncertainty. Measures of attractiveness and of willingness to delay the resolution of uncertainty were obtained for 16 two-outcome gambles with expected value of $1000 and for reflected versions of the same gambles. In both sets, the correlation between the means of the two measures was almost perfect. Positively skewed gambles were most attractive, and associated with the highest tolerance for delayed resolution. A measure of willingness to pay for early resolution showed a similar pattern. Copyright (C) 2000 John Wiley & Sons, Ltd. Language: en

Data from several experiments show that, contrary to traditional models of variety seeking, individuals choose to switch to less-preferred options even though they enjoy those items less than they would have enjoyed repeating a more-preferred option. Two explanations for this finding are tested. Results indicate no evidence of a benefit to more-preferred options due to the contrast to less-preferred alternatives. However, the results of three studies suggest that retrospective global evaluations favor varied sequences that also include less-preferred items as opposed to sequences that only include more-preferred items, even though these more varied sequences result in diminished enjoyment during consumption. Copyright 1999 by the University of Chicago.

Evidence exists that the intention to perform certain cognitive tasks activates, unintentionally, competing responses and computations that intrude on the performance of the intended tasks. For the intended task to be performed effectively, such intrusions must be controlled. Two experiments were carried out to test the hypothesis that stress heightens the difficulty of exercising effective control over erroneous competing responses, a possible explanation of decrements in the performance of cognitive tasks under stress. Participants performed four tasks, which contained features that could potentially prime or activate erroneous responses. The results demonstrated that the interference of these features with performance was more pronounced among stressed than among less-stressed participants. The need for a more comprehensive theory of the effects of stress on information processing is discussed.

Schacter et al. (2007, this issue) address the controversy surrounding an Illinois pilot project that attempted to compare sequential versus simultaneous police lineup formats. The statement by these experts will guide the design and execution of future field lineup experiments. This commentary discusses three aspects of field studies that pose challenges as lineup experiments are interpreted: the imprecise meaning of the dependent measure (eyewitness decisions), the limitations of single studies, and the necessity to devise public policy from incomplete knowledge. A combination of laboratory and field information provides the means to determine best practices in eyewitness identification procedures.

Large samples of students in the Midwest and in Southern California rated satisfaction with life overall as well as with various aspects of life, for either themselves or someone similar to themselves in one of the two regions. Self-reported overall life satisfaction was the same in both regions, but participants who rated a similar other expected Californians to be more satisfied than Midwesterners. Climate-related aspects were rated as more important for someone living in another region than for someone in one's own region. Mediation analyses showed that satisfaction with climate and with cultural opportunities accounted for the higher overall life satisfaction predicted for Californians. Judgments of life satisfaction in a different location are susceptible to a focusing illusion: Easily observed and distinctive differences between locations are given more weight in such judgments than they will have in reality.

Different interpretations of an apparent temporal pattern to the experience of regret were addressed through joint research. T. Gilovich and V. H. Medvec (1995a) argued that people regret actions more in the short term and inactions more in the long run because the sting of regrettable action diminishes relatively quickly, whereas the pain of regrettable inaction lingers longer. D. Kahneman (1995) disagreed, arguing that people's long-term regrets of inaction are largely wistful and therefore not terribly troublesome. Three studies that examined the emotional profile of action and inaction regrets established considerable common ground. Action regrets were found to elicit primarily "hot" emotions (e.g., anger), and inaction regrets were found to elicit both feelings of wistfulness (e.g., nostalgia) and despair (e.g., misery). Thus, some inaction regrets are indeed wistful (as Kahneman argued), whereas others are troublesome (as Gilovich and Medvec maintained).

This study reports on experiments that examine anchoring in single referendum questions in contingent valuation surveys on willingness to pay for public goods, and on objective estimation. Strong anchoring effects are found that lead to systematically higher estimated mean responses from Yes/No referendum responses than from open-ended responses. This response pattern is similar for contingent valuation questions and for objective estimation questions. The paper concludes that psychometric anchoring effects, rather than incentive effects, are the likely cause of results commonly found in contingent valuation studies, and that the currently popular single referendum elicitation format is highly vulnerable to anchoring.

An experimental study of punitive damage awards in personal injury cases was conducted, using jury-eligible respondents. There was substantial consensus on judgments of the outrageousness of a defendant's actions and of the appropriate severity of punishment. Judgments of dollar awards made by individuals and synthetic juries were much more erratic. These results are familiar characteristics of judgments made on unbounded magnitude scales. The degree of harm suffered by the plaintiff and the size of the firm had a pronounced effect on awards. Some judgmental tasks are far easier than others for juries to perform, and reform possibilities should exploit this fact.

In contrast to logical criteria of rationality, which can be assessed entirely by reference to the system of preferences, substantive criteria of rational choice refer to an independent evaluation of the outcomes of decisions. One of these substantive criteria is the experienced hedonic utility of outcomes. Research indicates that people are myopic in their decisions, may lack skill in predicting their future tastes, and can be led to erroneous choices by fallible memory and incorrect evaluation of past experiences. Theoretical and practical implications of these challenges to the assumption of economic rationality are discussed.

Two experiments investigated whether individuals choose to listen to songs that maximize their enjoyment on each trial (local maximization) or across the sequence of trials (global maximization). In Study 1, participants made repeated choices between one liked song and one disliked song. In Study 2, participants made repeated choices between a liked song and two less-preferred songs. Participants' choices and ratings indicate that they did not maximize locally. In both studies, participants switched to the less-preferred songs before their ratings of the favored songs had declined to the level of the less-preferred songs. Additionally, in Study 2, more participants chose their favorite song on a given trial when it was the last trial of the block than when the block was expected to continue. This indicates that participants who did not choose the favored song in the latter case were not maximizing locally. That individuals continued to choose variety even at the very end of the experiments also suggests that they were not maximizing globally. Thus, the present studies suggest the intriguing possibility that participants' variety seeking did not reflect local or global maximization. Implications for variety seeking are discussed.