HARRY HELSON’S ADAPTATION-LEVEL THEORY, HAPPINESS TREADMILLS, AND BEHAVIORAL ECONOMICS

Abstract

Psychologist Harry Helson (1898–1977) developed Adaptation-Level (AL) theory during the 1930s to the 1970s, while economics was being refined through ordinalism and expected utility theory. This essay accounts for the process of transmission of AL theory from psychophysics to behavioral psychology and eventually economics. It explains how the concept of adaptation reflectance, originally intended to explain color vision, developed into an experimental approach that caught the attention of both psychologists and economists working on welfare analysis and behavioral research. It also argues that the history of AL theory—so far, absent from narratives about economics and psychology—is worth exploring in order to gain a better understanding of the relationship between the two disciplines.