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Optimizing Happiness

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A Long View of Research and Practice in Operations Research and Management Science

Part of the book series: International Series in Operations Research & Management Science ((ISOR,volume 148))

Abstract

We consider a resource allocation problem in which time is the principal resource. Utility is derived from time-consuming leisure activities, as well as from consumption. To acquire consumption, time needs to be allocated to income generating activities (i.e., work). Leisure (e.g., social relationships, family, and rest) is considered a basic good, and its utility is evaluated using the Discounted Utility Model. Consumption is adaptive and its utility is evaluated using a reference-dependent model. Key empirical findings in the happiness literature can be explained by our time allocation model. Further, we examine the impact of projection bias on time allocation between work and leisure. Projection bias causes individuals to overrate the utility derived from income; consequently, individuals may allocate more than the optimal time to work. This misallocation may produce a scenario in which a higher wage rate results in a lower total utility.

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Author information

Authors and Affiliations

  1. Department of Managerial Decision Sciences, IESE Business School, Barcelona, Spain

    Manel Baucells

  2. Decisions, Operations & Technology Management Area, UCLA Anderson School of Management, University of California, Los Angeles, CA, USA

    Rakesh K. Sarin

Authors
  1. Manel Baucells
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  2. Rakesh K. Sarin
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Editor information

Editors and Affiliations

  1. Cass Business School, City University, Bunhill Row 106, London, EC1Y 8TZ, United Kingdom

    ManMohan S. Sodhi

  2. Anderson School of Management, University of California, Los Angeles, Westwood Plaza 110, Los Angeles, 90095, California, USA

    Christopher S. Tang

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Baucells, M., Sarin, R.K. (2010). Optimizing Happiness. In: Sodhi, M., Tang, C. (eds) A Long View of Research and Practice in Operations Research and Management Science. International Series in Operations Research & Management Science, vol 148. Springer, Boston, MA. https://doi.org/10.1007/978-1-4419-6810-4_14

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