As elections continue to polarise societies, understanding their psychological dimensions can help both parties and policymakers anticipate how political events impact public wellbeing. This column analyses data from the last four US presidential elections to study drivers of self-reported happiness. The authors find that happiness responds to changes in both the political status quo (the incumbent presidential party) and the expected electoral outcome. Their analysis confirms three premises: individuals seem to exhibit loss aversion in happiness reactions, almost complete hedonic adaptation, and significant partisan bias in beliefs.
Happiness has been extensively studied by economists and social scientists at least since Jeremy Bentham (1781). Previous studies show that recent changes matter, but the relationship between external events and wellbeing is more complex than a simple reaction to wins and losses – anticipation and disappointment play a crucial role in shaping emotional responses (Proto et al. 2013, Ward 2015). Economists have intuitively related the adaptation of happiness to notions of reference dependence, but have made few attempts to formally understand how we can use reference dependence models to understand happiness and vice versa. Elections are major events that can involve both surprise (expectation deviations) and, in the US, a change in presidential party (i.e. alterations to the status quo). Elections affect a large number of people at the same point in time, providing a natural setting to address the question.
This column draws upon our recent research (Kimball et al. 2024), which is based on self-reported happiness measures with data on political preferences, beliefs, and expectations in US presidential elections from 2008 to 2020. We show how to leverage election data to understand one of the most important behavioural biases: reference dependence. Election data can also help us understand another well-known behavioural bias: motivated beliefs.
Dynamics of change in happiness and reference dependence
To measure happiness, we asked survey respondents in the US to report their well-being on an eight-point Likert scale, which we rescaled from zero (extremely unhappy) to 100 (extremely happy).
In the large literature on reference dependence, researchers often focus on one of two main reference points: the status quo (e.g. Kahneman and Tversky 1979) and expectations about the future (Kőszegi and Rabin 2006). There is a change in the status quo when there is a change in the incumbent party. We measure deviations from expectations by one minus the predicted probability that one’s supported candidate will be elected.
Using our data, we can identify the extent to which changes in happiness are driven by changes in the incumbent presidential party (the status quo) versus deviations in individuals’ expectations about an election outcome from the realised outcome. We find that both matter, but in distinct ways: expectation deviations are associated with significant hedonic loss aversion (where losses are felt more strongly than gains), while changes from the status quo lead to loss neutrality.
Figure 1 further illustrates happiness dynamics and the effects of both reference points. We can clearly see that a large portion of the immediate reaction is driven by surprise, particularly for losses. The longer-term effect is driven by changes relative to the status quo because the hedonic adaptation to disruptions of the status quo is relatively slow. Though it appears in our figure that adaptation to changes in the status quo is incomplete, this is because of the scale: our estimates of temporary effects indicate that the half-life of adaptation for the status quo is long: around 17 days compared to around one day for expectations. These findings highlight that people struggle to accept major political change but adjust more quickly when outcomes defy their expectations.
Figure 1 Dynamics of change in happiness and reference points
Motivated beliefs
The strength of partisanship does not shape only how people vote; it also affects how they interpret election results. Research on motivated beliefs suggests that individuals unconsciously adjust expectations to align with their ideological preferences (Bénabou 2015). We address this concern in two steps. First, we gauge how prevalent motivated beliefs are in our setting by showing the extent to which beliefs vary in systematic ways with political preferences.
Figure 2 plots surprise against partisanship strength by election year. Here, we use the same partisanship scale as elsewhere (1/3, 2/3, 1 indicating weak, medium and strong partisanship), but assign negative partisanship to supporters of losers, and positive partisanship to supporters of winners. Surprise is measured as the deviation from expectations. For each year, surprise decreases with the degree of partisanship towards the election winner’s party. In other words, the more someone supported the eventual winner, the less surprised they were by the election outcome.
Figure 2 Partisanship and surprise
Second, we decompose the original measure of surprise (deviation from expectations) into objective and subjective surprises, and analyse their independent effects. We adopt two measures of objective surprise. First, we define market-based surprise as the gap between actual results and leading election forecasts from FiveThirtyEight predictions (the amount of surprise the best available election forecasts would have experienced by the results). Second, we estimate what an unbiased individual with no partisan leanings would expect.
Our results show that both objective (market-based) and subjective (motivated) beliefs influence happiness, but objective beliefs tend to matter more. This suggests that bias-driven expectations are at least partially real in a hedonic sense, affecting people’s well-being beyond mere rhetoric.
Conclusion: How elections reshape wellbeing
We confirm three established facts: individuals seem to exhibit loss aversion in happiness reactions, almost complete hedonic adaptation, and significant partisan bias in beliefs.
Beyond these findings, our study offers novel insights. Happiness shifts in response to both the political status quo and election expectations, reinforcing the importance of reference points. People exhibit no hedonic asymmetry for status quo changes but strong asymmetry for expectation violations. Adaptation to shifts in status quo is significantly slower than adaptation to unexpected results, shaping long-term wellbeing. Motivated beliefs impact happiness, but objective realities tend to matter more.
As elections continue to polarise societies, understanding these psychological dynamics can help us anticipate how political events impact public wellbeing, beyond just their policy effects.
Source : VOXeu
