Description: The hedonic model is an approach that evaluates individuals’ economic choices based on the pursuit of pleasure and satisfaction. This model focuses on how people value goods and services not only for their functional utility but also for the emotional and sensory experiences they can provide. In this sense, the hedonic model diverges from the traditional view of economics, which tends to consider utility maximization as the sole decision criterion. Instead, the hedonic model recognizes that consumption decisions are influenced by subjective factors such as personal preferences, emotions, and satisfaction expectations. This approach allows for a deeper understanding of how consumers make decisions in a market where experience and pleasure play a crucial role. Furthermore, the hedonic model is applied in various areas, including welfare economics, consumer theory, and public policy evaluation, providing a framework for analyzing how consumption choices affect individuals’ quality of life and overall well-being.
History: The hedonic model has its roots in 20th-century economic theory, particularly in the work of economists like Richard Easterlin, who in the 1970s explored the relationship between income and happiness. Over the years, the model has evolved and been integrated into various disciplines, including welfare economics and consumer psychology. In the 1980s, it was further formalized with the development of statistical methods to measure the hedonic value of goods and services, allowing researchers to quantify consumer satisfaction more accurately.
Uses: The hedonic model is primarily used in the assessment of quality of life and well-being, as well as in market research to understand consumer preferences. It is also applied in asset valuation, such as real estate, where the characteristics of a property are analyzed in terms of how they influence its price based on the satisfaction they provide to buyers. Additionally, it is useful in public policy formulation, helping policymakers understand how economic decisions affect the overall well-being of the population.
Examples: A practical example of the hedonic model can be seen in various markets, such as automobiles, where consumers consider not only the price and fuel efficiency but also the pleasure of driving, design, and brand. Another case is in real estate, where properties in prime locations may have higher prices due to the satisfaction they offer to their owners, such as panoramic views or access to exclusive services.
