The asymmetric effect of expectations on subjective well-being

We empirically explore the relationship between expectations and subjective well-being. The-
oretical models predict that expectations can in
uence experienced utility in two ways: (i)
directly as anticipatory emotions in the form of savouring or dread; (ii) indirectly as internal
reference levels in the form of deviations between expectations and actual achievements. We
use twelve waves of the British Household Panel Survey to empirically investigate the double
effect of expectations on experienced utility, as proxied by subjective well-being. We find a
strong asymmetry in the way expectations affect subjective well-being. Negative deviations
from expectations have a strong negative effect on subjective well-being, while the effect of
positive deviations is weaker and sometimes insignificant. Expecting a worsening has a larger
impact on subjective well-being than expecting an improvement.