Expectations and Happiness: Evidence from Spain

Journal of Social Research & Policy, Volume: 5, Issue: 2, pp. 89-102

Date: December 2014

ISSN: 2067-2640 (print), 2068-9861 (electronic)

Abstract: What is the role of people’s expectations in explaining their happiness? Most research in this area focuses on the impact of the realization of expectations on happiness. With micro-level data from Spain, this paper studies the impact of current expectations on current happiness. The paper uses an instrumental-variables approach to control for potential endogeneity problems in order to find out what role expectations play in explaining current happiness. Results show that having positive expectations contributes to people’s current satisfaction with life. It was also found that people’s expectations are related to their personality and the trend in their economic situation. The paper contributes to the literature about expectations and happiness and it shows that recommending people to keep their expectations low may not necessarily be good advice in terms of their current happiness.

Keywords: Life Expectations; Life Satisfaction; Optimism; Happiness; Spain.