Accident victims who suffer severe injury often become accustomed to their new circumstances after a period of depression. Similarly, lottery winners frequently return to a baseline happiness level after a time of euphoria. Although the capacity to adapt to changing circumstances has a powerful effect on well-being levels, this feature of the human condition is overlooked by the standard neoclassical model of choice which asserts that utility depends only on consumption. This article argues that the neoclassical model, which measures well-being by absolute consumption levels, fails to account for contributions to quality of life arising from both the human capacity to adapt and relative consumption.
