Education, Aspirations and Life Satisfaction

Abstract

The idea that expanding work and consumption opportunities always increases people's wellbeing is well established in economics but finds no support in psychology. Instead, there is evidence in both economics and psychology that people's life satisfaction depends on how experienced utility compares with expectations of life satisfaction or decision utility. Copyright 2009 Blackwell Publishing Ltd.

What Makes Entrepreneurs Happy? Determinants of Satisfaction Among Founders

“…Highly educated self-confident entrepreneurs may have a hard time meeting their own high expectations and have difficulty compensating for their high opportunity costs. Indeed, Ferrante (2009) finds that higher educated people are more likely to regret forgone opportunities. Also, well-educated entrepreneurs may be more likely to overestimate their abilities to run a venture and become disappointed than entrepreneurs with lower levels of education.…”

“…Satisfaction may partly be determined by the extent of overoptimism, with the disappointment of overoptimistic entrepreneurs limiting their satisfaction. In this respect, Ferrante (2009) directly connects people's life satisfaction to a (positive) difference between expected and realized outcomes. Several explanations have been proposed for the overoptimistic nature of entrepreneurs.…”

Great Expectations: The Unintended Consequences of Educational Choices

“…Systematic empirical evidence shows that the age--happiness and age--life satisfaction relationships are U--shaped (Easterlin, 2006;Blanchflower et al 2007) and that the latter curvature may depend on people's education (Ferrante, 2009): happiness/life satisfaction starts to decline early in adult life, more rapidly for more educated people, and it reaches a minimum between 40 and 50 years. Why people experience a substantial drop in their well being right at the beginning of adult life and why the size of this effect depends on education?…”

“…A suggested explanation of the initial drop in well being is that (a) people's well being depends strongly on the comparison between decision and experienced utility and that (b) people formulate systematically biased predictions about their socioeconomic opportunities (Ferrante, 2009) 1 which materialise as such at the beginning of their adult life. Conjectures about the formation of biased predictions include the idea that people lack information about their unobservable abilities/talents and/or that people are affected by a self serving bias (Babcock and Lowenstein 1997;Roese and Summerville, 2007).…”

“…In this paper which builds on Ferrante (2009), I address these issues and to test my main predictions on the education--well being nexus, I explore data drawn from the Survey 4 For instance, education curricula differ for the social skills they provide and that are required to enjoy social relationships (Scitosvky, 1992, Pugno, 2009, Becchetti et al 2008 Owing to the difficulties to disentangle the direct affect of education on the most inclusive measure of WB, i.e. happiness from its effect generated through different life domains, the conjectures proposed here are not based on robust econometric analysis showing casual links but on the interpretation of the combined evidence coming out of the descriptive statistical analysis and of some econometric exercises.…”