Comparison Theory in Economic Psychology Regarding the Easterlin Paradox and Decreasing Marginal Utility: a Critique

This paper challenges the assumption within Economics that the relationship between money and subjective wellbeing is determined
by processes of cognitive comparison. An alternative explanation for such well known phenomena as the Easterlin Paradox and
Decreasing Marginal Utility are provided through a consideration of affect. The theoretical basis for such explanations relies
on theory from Psychology usually overlooked by Economists, such as affect heuristics and Subjective Wellbeing Homeostasis.
The presented evidence for this alternative source of explanation melds psychological theory with empirical data. It is concluded
that affective processes offer a coherent alternative explanation for the phenomena under discussion.