Discussion Papers in Economics No. 2008/17 Thinking About It: A Note on Attention and Well-Being Losses From Unemployment No. 2000/62By Paul Dolan, Imperial College and Nattavudh Powdthavee, University of London and Dynamics of Output Growth,University Consumption of York and Physical Capital in Two-Sector Models of Endogenous Growth Department of Economics and Related Studies University of York Heslington York, YO10 5DD Thinking About It: A Note on Attention and Well-Being Losses from Unemployment Paul Dolan1 Tanaka Business School, Imperial College Nattavudh Powdthavee2 University of London and University of York 8th April 2008 Abstract This note investigates Schkade and Kahneman’s (1998) maxim that “Nothing in life is quite as important as you think it is while you are thinking about it”. The paper shows that whilst becoming unemployed hurts psychologically, unemployment has a greater impact on happiness if the person also regards it as an important event that took place in the last year. This finding, particularly if it is replicated for other domains, such as health and income, will have important implications for how we think about the impact of objective circumstances on well-being and about well- being more generally. Key words: happiness; well-being; attention; focusing illusion; unemployment JEL: H0, I0 1 Tanaka Business School, Imperial College London, South Kensington campus, London, SW7 2AZ, UK. Email:
[email protected]. Tel: +44(0)20 7594 2075. 2 Department of Quantitative Social Science, Institute of Education, University of London, 55-59 Gordon Square, London, WC1H 0NU, UK. Email:
[email protected].