The economics of happiness or happiness economics is the quantitative
and theoretical study of happiness, positive and negative affect,
well-being, quality of life, life satisfaction and related
concepts, typically combining economics with other fields such as
psychology, health and sociology. It typically treats such
happiness-related measures, rather than wealth, income or profit, as
something to be maximized. The field has grown substantially since the
late 20th century, for example by the development of methods, surveys
and indices to measure happiness and related concepts. Its findings
have been described as a challenge to the economics profession.
1 Subject classifications
GDP and GNP
3.2 Individual income
3.3 Social security
3.5 Relationships and children
3.6 Freedom and control
3.7 Religious diversity
Happiness and leisure
4 Alternative approach: economic consequences of happiness
Happiness economics and indices timeline
6 Related studies
7 Neoclassical economics
9 See also
11 References and notes
12 External links
The subject may be categorized in various ways, depending on
specificity, intersection, and cross-classification. For example,
within the Journal of Economic Literature classification codes, it has
been categorized under:
Welfare economics at JEL: D63 – Equity, Justice, Inequality, and
Other Normative Criteria and Measurement
Health, education, and welfare at JEL: I31 – General Welfare; Basic
needs; Living standards; Quality of life; Happiness
Demographic economics at JEL:J18 – Public Policy.
Given its very nature, reported happiness is subjective. It is
difficult to compare one person's happiness with another's. It can
be especially difficult to compare happiness across cultures.
However, many happiness economists believe they have solved this
comparison problem. Cross-sections of large data samples across
nations and time demonstrate consistent patterns in the determinants
Happiness is typically measured using subjective measures – e.g.
self-reported surveys – and/or objective measures. One concern has
always been the accuracy and reliability of people's responses to
happiness surveys. Objective measures such as lifespan, income, and
education are often used as well as or instead of subjectively
reported happiness, though this assumes that they generally produce
happiness, which while plausible may not necessarily be the case. The
terms quality of life or well-being are often used to encompass these
more objective measures.
Some scientists claim that happiness can be measured both subjectively
and objectively by observing the joy center of the brain lit up with
advanced imaging, although this raises philosophical issues, for
example about whether this can be treated as more reliable than
reported subjective happiness.
Micro-econometric happiness equations have the standard form:
displaystyle W_ it =alpha +beta x_ it +epsilon _ it
. In this equation
is the reported well-being of individual
is a vector of known variables, which include socio-demographic and
Happiness, well-being, or satisfaction with life, was seen as
unmeasurable in classical and neo-classical economics. Van Praag was
the first person who organized large surveys in order to explicitly
measure welfare derived from income. He did this with the Income
Evaluation Question (IEQ). This approach is called the Leyden School.
It named after the Dutch university where this approach was developed.
Other Researchers included Arie Kapteyn and Aldi Hagenaars.
GDP and GNP
Typically national financial measures, such as gross domestic product
(GDP) and gross national product (GNP), have been used as a measure of
successful policy. There is a significant association between
happiness, with citizens in wealthier nations being happier than those
in poorer nations. It has been argued that this
relationship extends only to an average
GDP per capita of about
$15,000. Conclusions in this are controversial.
Historically, economists have said that well-being is a simple
function of income. However, it has been found that once wealth
reaches a subsistence level, its effectiveness as a generator of
well-being is greatly diminished.
Happiness economists hope to
change the way governments view well-being and how to most effectively
govern and allocate resources given this paradox.
Daniel Kahneman and
Angus Deaton found that higher earners
generally reported better life satisfaction, but people's day-to-day
emotional well-being only rose with earnings until a threshold annual
income of $75,000.
Other factors have been suggested as making people happier than
money. A short term course of psychological therapy is 32 times
more cost effective at increasing happiness than simply increasing
Scholars at the University of Virginia, University of British Columbia
Harvard University released a study in 2011 after examining
numerous academic paper in response to an apparent contradiction:
"When asked to take stock of their lives, people with more money
report being a good deal more satisfied. But when asked how happy they
are at the moment, people with more money are barely different than
those with less." Published in the Journal of Consumer Psychology, the
study is entitled "If
Money Doesn't Make You Happy, Then You Probably
Aren't Spending It Right" and included the following eight general
Spend money on "experiences" rather than goods.
Donate money to others, including charities, rather than spending it
solely on oneself.
Spend small amounts of money on many small, temporary pleasures rather
than less often on larger ones.
Don't spend money on "extended warranties and other forms of
Adjust one's mindset to "pay now, consume later," instead of "consume
now, pay later."
Exercise circumspection about the day-to-day consequences of a
Rather than buying products that provide the "best deal," make
purchases based on what will facilitate well-being.
Seek out the opinions of other people who have prior experience of a
product before purchasing it.
In their "Unhappy Cities" paper, Edward Glaeser, Joshua Gottlieb and
Oren Ziv examined the self-reported subjective well-being of people
living in American metropolitan areas, particularly in relation to the
notion that "individuals make trade-offs among competing objectives,
including but not limited to happiness." The researchers findings
revealed that people living in metropolitan areas where lower levels
of happiness are reported are receiving higher real wages, and they
suggest in their conclusion that "humans are quite understandably
willing to sacrifice both happiness and life satisfaction if the price
Ruut Veenhoven showed that social security payments do not seem to add
to happiness. This may be due to the fact that non-self-earned income
(e.g., from a lottery) does not add to happiness in general either.
Happiness may be the mind's reward to a useful action. However, Johan
Norberg of CIS, a free enterprise economy think tank, presents a
hypothesis that as people who think that they themselves control their
lives are more happy, paternalist institutions may decrease
An alternative perspective focuses on the role of the welfare state as
an institution that improves quality of life not only by increasing
the extent to which basic human needs are met, but also by promoting
greater control of one's life by limiting the degree to which
individuals find themselves at the mercy of impersonal market forces
that are indifferent to the fate of individuals. This is the argument
suggested by the U.S. political scientist Benjamin Radcliff, who has
presented a series of papers in peer reviewed scholarly journals
demonstrating that a more generous welfare state contributes to higher
levels of life satisfaction, and does so to rich and poor
Generally, the well-being of those who are employed is higher than
those who are unemployed. Employment itself may not increase
subjective well-being, but facilitates activities that do (such as
supporting a family, philanthropy, and education). While work does
increase well-being through providing income, income level is not as
indicative of subjective well-being as other benefits related to
employment. Feelings of autonomy and mastery, found in higher
levels in the employed than unemployed, are stronger predictors of
subjective well-being than wealth.
When personal preference and the amount of time spent working do not
align, both men and women experience a decrease in subjective
well-being. The negative effect of working more or working less
than preferred has been found across multiple studies, most finding
that working more than preferred (over-employed) is more detrimental,
but some found that working less (under-employed) is more
detrimental. Most individuals' levels of subjective well-being
returned to "normal" (level previous to time mismatch) within one
year. Levels remained lower only when individuals worked more hours
than preferred for a period of two years or more, which may indicate
that it is more detrimental to be over-employed than under-employed in
Employment status effects are not confined to the individual. Being
unemployed can have detrimental effects on a spouse's subjective
well-being, compared to being employed or not working (and not looking
for work). Partner life satisfaction is inversely related to the
number of hours their partner is underemployed. When both partners are
underemployed, the life-satisfaction of men is more greatly diminished
than women. However, just being in a relationship reduces the
impact unemployment has on the subjective well-being of an
individual. On a broad scale, high rates of unemployment
negatively affect the subjective well-being of the employed.
Becoming self-employed can increase subjective well-being, given the
right conditions. Those who leave work to become self-employed report
greater life satisfaction than those who work for others or become
self-employed after unemployment; this effect increases over
time. Those who are self-employed and have employees of their
own report higher life-satisfaction than those who are self-employed
without employees, and women who are self-employed without employees
report a higher life satisfaction than men in the same condition.
The effects of retirement on subjective well-being vary depending on
personal and cultural factors.
Subjective well-being can remain stable
for those who retire from work voluntarily, but declines for those who
are involuntarily retired. In countries with an average social
norm to work, the well-being of men increases after retirement, and
the well-being of retired women is at the same level as women who are
homemakers or work outside the home. In countries with a strong
social norm to work, retirement negatively impacts the well-being of
men and women.
Relationships and children
Relative declines in female happiness have eroded a gender gap in
happiness in which women in the 1970s typically reported higher
subjective well-being than did men.
In rich societies, where a rise in income doesn't equate to an
increase in levels of subjective well-being, personal relationships
are the determining factors of happiness.
Glaeser, Gottlieb and Ziv suggest in their conclusion that the
happiness trade-offs that individuals seem willing to make aligns with
the tendency of parents to report less happiness, as they sacrifice
their personal well-being for the "price" of having children.
Freedom and control
There is a significant correlation between feeling in control of one's
own life and happiness levels.
A study conducted at the
University of Zurich
University of Zurich suggested that democracy
and federalism bring well-being to individuals. It concluded that
the more direct political participation possibilities available to
citizens raises their subjective well-being. Two reasons were
given for this finding. First, a more active role for citizens enables
better monitoring of professional politicians by citizens, which leads
to greater satisfaction with government output. Second, the
ability for citizens to get involved in and have control over the
political process, independently increases well-being.
American psychologist Barry Schwartz argues in his book The Paradox of
Choice that too many consumer and lifestyle choices can produce
anxiety and unhappiness due to analysis paralysis and raised
expectations of satisfaction.
National cross-sectional data suggest an inverse relation between
religious diversity and happiness, possibly by facilitating more
bonding (and less bridging) social capital.
Happiness and leisure
Happiness and Leisure
Much of the research regarding happiness and leisure relies on
subjective well-being (SWB) as an appropriate measure of happiness.
Research has demonstrated a wide variety of contributing and resulting
factors in the relationship between leisure and happiness. These
include psychological mechanisms, and the types and characteristics of
leisure activities that result in the greatest levels of subjective
happiness. Specifically, leisure may trigger five core psychological
mechanisms including detachment-recovery from work, autonomy in
leisure, mastery of leisure activities, meaning-making in leisure
activities, and social affiliation in leisure (DRAMMA). Leisure
activities that are physical, relational, and performed outdoors are
correlated with greater feelings of satisfaction with free time.
Research across 33 different countries shows that individuals who feel
they strengthen social relationships and work on personal development
during leisure time are happier than others. Furthermore,
shopping, reading books, attending cultural events, getting together
with relatives, listening to music and attending sporting events is
associated with higher levels of happiness. Spending time on the
internet or watching TV is not associated with higher levels of
happiness as compared to these other activities.
Research has shown that culture influences how we measure happiness
and leisure. While SWB is a commonly used measure of happiness in
North America and Europe, this may not be the case internationally.
Quality of life (QOL) may be a better measure of happiness and leisure
in Asian countries, especially Korea. Countries such as
Japan may require a different measurement of happiness, as societal
differences may influence the concept of happiness (i.e. economic
variables, cultural practices, and social networks) beyond what QOL is
able to measure. There seem to be some differences in leisure
preference cross-culturally. Within the Croatian culture, family
related leisure activities may enhance SWB across a large spectrum of
ages ranging from adolescent to older adults, in both women and men.
Active socializing and visiting cultural events are also associated
with high levels of SWB across varying age and gender. Italians
seem to prefer social conceptions of leisure as opposed to
individualistic conceptions. Although different groups of individuals
may prefer varying types and amount of leisure activity, this
variability is likely due to the differing motivations and goals that
an individual intends to fulfill with their leisure time.
Research suggests that specific leisure interventions enhance feelings
of SWB. This is both a top-down and bottom-up effect, in that leisure
satisfaction causally affects SWB, and SWB causally affects leisure
satisfaction. This bi-directional effect is stronger in retired
individuals than in working individuals. Furthermore, it appears that
satisfaction with our leisure at least partially explains the
relationship between our engagement in leisure and our SWB.
Broadly speaking, researchers classify leisure into active (e.g.
volunteering, socializing, sports and fitness) and passive leisure
(e.g. watching television and listening to the radio). Among older
adults, passive leisure activities and personal leisure activities
(e.g. sleeping, eating, and bathing) correlate with higher levels of
SWB and feelings of relaxation than active leisure activities. Thus,
although significant evidence has demonstrated that active leisure is
associated with higher levels of SWB, or happiness, this may not be
the case with older populations.
Both regular and irregular involvement in sports leisure can result in
heightened SWB. Serious, or systematic involvement in certain leisure
activities, such as taekwondo, correlates with personal growth and a
sense of happiness. Additionally, more irregular (e.g. seasonal)
sports activities, such as skiing, are also correlated with high SWB.
Furthermore, the relationship between pleasure and skiing is thought
to be caused in part by a sense of flow and involvement with the
Leisure activities, such as meeting with friends,
participating in sports, and going on vacation trips, positively
correlate with life satisfaction. It may also be true that going
on a vacation makes our lives seem better, but does not necessarily
make us happier in the long term. Research regarding vacationing or
taking a holiday trip is mixed. Although the reported effects are
mostly small, some evidence points to higher levels of SWB, or
happiness, after taking a holiday.
Alternative approach: economic consequences of happiness
While the mainstream happiness economics has focused on identifying
the determinants of happiness, an alternative approach in the
discipline examines instead what are the economic consequences of
Happiness may act as a determinant of economic outcomes: it
increases productivity, predicts one’s future income and affects
labour market performance. There is a growing number of studies
justifying the so-called "happy-productive worker" thesis. The
positive and causal impact of happiness on an individual's
productivity has been established in experimental studies.
Happiness economics and indices timeline
The idea that happiness is important to a society is not new. Many
other prominent intellectuals, philosophers and political leaders
throughout history, including Aristotle, Confucius, and Plato,
incorporated happiness into their work.
Thomas Jefferson put the "pursuit of happiness" on the same level as
life and liberty in the United States' Declaration of
Jeremy Bentham believed that public policy should
attempt to maximize happiness, and he even attempted to estimate a
"hedonic calculus". However, the American ruling philosophy
protects the right of individuals to seek their own happiness, but
does not place an equal responsibility for the citizens' happiness on
the government. In the United States, there is no explicit policy that
requires the rulers to develop the physical and mental well-being of
the citizens or hold the government agencies accountable for their
performance against specific measures or metrics of well-being. Until
the 1972 there was no formal government policy, anywhere in the world,
that placed happiness and well-being as a main criterion for public
policy decision making.
The following is a chronological list of happiness economics and
Happiness is more important than Gross National
Product" by Jigme Singye Wangchuck, King of Bhutan. Slogan on a wall
in Thimphu's School of Traditional Arts
1972 – Bhutan's former king, Jigme Singye Wangchuck, introduced the
Happiness (GNH) philosophy and its four development
pillars at an international conference.
Med Jones of the International Institute of Management
introduced the first GNH Index and Global GNH Index Survey. The
GNH Index, also known as Gross National
Well-being (GNW) Index
framework served as the first integrated objective (economic) and
subjective (happiness) socioeconomic development framework. Prior the
GNH Index, there were few development indices that improved upon the
gross domestic product (GDP), but did not measure happiness. For
Genuine Progress Indicator
Genuine Progress Indicator was focused on the
environmental cost of economic development, then later (in 2006) it
was updated to include similar measures to the GNH Index. Another
development index is the
Human Development Index
Human Development Index (HDI) that originally
focused on literacy and education but also did not measure
happiness. The HDI now measures three basic dimensions of human
development, health (as measured by life expectancy at birth), overall
knowledge level (as measured by the literacy rate), and standard of
living (as measured by
GDP per capita for a given year). Among the
criticisms of the HDI is the complaint that it is a mixture of stock
measures (life expectancy at birth and literacy rate) and a flow
GDP per capita for a given year). To overcome this criticism,
Hou, Walsh, and Zhang (2015) proposed a new index called HDIF (Human
Development Index Flow), in which they replaced life expectancy at
birth by the under-five mortality rate (for a given year), and they
also replaced the literacy rate by the gross primary school enrollment
ratio for a given year). They calculated both the HDI and the HDIF for
many countries and found that "the HDIF and the HDI tend to converge
for wealthy countries and diverge for poor countries, especially those
with low HDI rankings". The development performance of poor countries
improved using the HDIF while the performance of the wealthy countries
2006 – The
Genuine Progress Indicator
Genuine Progress Indicator was updated from a green
measurement system to a broader concept that included quantitative
measurement of well-being and happiness. The new measure is
motivated by the philosophy of the GNH and the same notion of that
subjective measures like well-being are more relevant and important
than more objective measures like consumption. It is not measured
directly, but only the factors which are believed to lead to it.
Thailand releases Green and
Happiness Index (GHI).
2008 – French President
Nicolas Sarkozy launched a Happiness
Initiative similar to GNH, calling for the inclusion of happiness and
well-being among the criteria for national governance policies. He
commissioned three prominent economists, Joseph Stiglitz (USA),
Amartya Sen (India), Jean-Paul Fitoussi (France), to publish a report
calling for a global "statistical system which goes beyond commercial
activity to measure personal well-being." Later it was described as
gross domestic happiness (GDH). The GDH Index is similar to the
GNH Index of 2005.
2009 – In the United States, the
Gallup poll system launched the
happiness survey collecting data on national scale. The Gallup
Well-Being Index was modeled after the GNH Index framework of 2005.
The Well-Being Index score is an average of six sub-indexes that
measures life evaluation, emotional health, work environment, physical
health, healthy behaviors, and access to basic necessities. In October
2009, the US scored 66.1/100.
2010 – The concept was taken seriously, as the Centre for Bhutan
Studies, under the leadership of Karma Ura, developed a sophisticated
survey instrument to measure the population's general level of
well-being. Two Canadians, Michael and Martha Pennock played a
major role in developing the Bhutanese survey, which took a six- to
seven-hour interview to complete. They developed a shorter
international version of the survey which has been used in their home
region of Victoria BC as well as in Brazil. The Pennocks also
collaborated with Ura in the production of a policy lens which is used
by the Bhutanese GNH Commission for anticipating the impact of policy
initiatives upon the levels of GNH in Bhutan
2010 – The Center for
Bhutan Studies further defined the original
four pillars with greater specificity into eight general contributors
to happiness—physical, mental and spiritual health; time-balance;
social and community vitality; cultural vitality; education; living
standards; good governance; and ecological vitality. The
2010 – The Oxford Poverty and Human Development Initiative OPHI at
the University of Oxford in UK, launched the Multidimensional Poverty
Index (MPI) for the
United Nations Development Programme, (UNDP).
Similar to the GNH Index of 2005, OPHI promotes collection and
analysis of data on five dimensions including Quality of work,
Empowerment, Physical safety, Ability to go about without shame,
2011 – UN General Assembly Resolution 65/309, titled "Happiness:
towards a holistic approach to development"
2011 – The Organization for Economic Co-operation and Development
(OECD) launched "Better Life Index" (BLI).
2011 – The
United Nations released the World
2011 – Canadian Index of Wellbeing Network (CIW Network) released
The Canadian Index of Wellbeing (CIW).
2011 – The Israeli newspaper
Haaretz published an article suggesting
GDP economics is an incomplete development model and
called for the adoption of Bhutan's GNH philosophy and Jones' GNH
Index in Israel.
2011 – Chuluun Togtokh criticized the HDI in an article published in
Nature, calling for a revised HDI, writing that "The revised index
should include each nation's per capita carbon emissions, and so
become a Human Sustainable Development Index (HSDI)." Bravo (2014)
provided details of how the HSDI was computed and proposed an amended
HSDI by including the proportion of forested area in each country. He
argued that this proposed indicator "represents an important measure
of the capacity of natural system to provide fundamental ecological
2012 – In a report prepared for the US Congressman Hansen Clarke, R,
researchers Ben Beachy and Juston Zorn, at John F. Kennedy School of
Government in Harvard University, recommended that "the Congress
should prescribe the broad parameters of new, carefully designed
supplemental national indicators; it should launch a bipartisan
commission of experts to address unresolved methodological issues, and
include alternative indicators." They proposed that the government can
use the survey results to see which well-being dimensions are least
satisfied and which districts and demographic groups are most
deficient, so as to allocate resources accordingly. The report list
the Gross National
Happiness Index and its seven measurement area as
one of the main frameworks to consider.
2012 – Professor Peter T. Coleman, a director of the International
Center for Cooperation and Conflict Resolution at Columbia University,
suggested that Jones' GNH Index initiative could inform the Global
Peace Index Initiative GPI.
South Korea launched
Happiness Index citing the GNH Index
2012 – The government of Goa, India, published a strategy for
socioeconomic development citing the GNH Index as a model for
2012 – The city of
Seattle in Washington, launched its own happiness
index initiative, emphasizing measures similar to the GNH Index.
2013 – The
Social Progress Index SPI was launched by Michael Porter
2013 – The president of Singapore, Tony Tan, proposed that in
addition to building up substantial financial reserves, Singapore
needed to focus on building up its "social reserves", a concept that
appears to have parallels to GNH.
Economist Karol Jan Borowiecki motivates that well-being
indices can be obtained from the way people communicate, as is
established in psychology, and compiles the first well-being indices
covering the life-time of a person.
2013 – A joint commission led by the Conseil économique et social,
the Conseil supérieur pour un développement durable and the
Observatoire de la Compétitivité introduces a set of indicators
measuring the quality of life in Luxembourg. The conclusions of the
commission are summarised in a document titled "Projet PIBien-être",
which identifies 64 indicators belonging to 11 different domains to
assess quality of life in Luxembourg.
2014 – The government of
Dubai launched its localized Happiness
Index to measure the public's contentment and satisfaction with
different government services.
2014 – The
United Kingdom launched its own well-being and happiness
2015 – Within the "Projet PIBien-être" launched in 2013, STATEC
(National Institute of Statistics and Economic Studies of the Grand
Duchy of Luxembourg) presents a preliminary analysis of the
"Luxembourgish Index of Well-being" (LIW), a first proposal of
synthetic indicator measuring the quality of life in Luxembourg.
The presentation entitled "Preliminary Assessment of Quality of Life
in Luxembourg" was delivered by Marcin Piekałkiewicz on 16 December
2017 – The Minderoo Foundation launched the Global Slavery Index,
providing a map of the estimated prevalence of modern slavery. The
information allows an objective comparison and assessment of both the
problem and adequacy of the response in 167 countries.
The Satisfaction with Life Index. Blue through red represent most to
least happy respectively; grey areas have no reliable data available.
Satisfaction with Life Index
Satisfaction with Life Index is an attempt to show the average
self-reported happiness in different nations. This is an example of a
recent trend to use direct measures of happiness, such as surveys
asking people how happy they are, as an alternative to traditional
measures of policy success such as
GDP or GNP. Some studies suggest
that happiness can be measured effectively. The Inter-American
Development Bank (IDB), published in November 2008 a major study on
happiness economics in Latin America and the Caribbean.
In 2013, John Helliwell,
Richard Layard and Jeffery Sachs compiled a
treatise under the title "World
Happiness report 2013" to elaborate on
the measurement of popular happiness in different countries thereby
adding to the wealth of happiness data available while specifically
discussing the issues of measurement, explanation and policy. Global
Happiness Levels are explained in terms of 10 regional
groupings of countries based on happiness data available for the year
2010-2012. The happiness level is explained as a function of
capita, social support, and healthy life expectancy, freedom to make
life choices, generosity and perceptions of corruption.
There are also several examples of measures that includes
self-reported happiness as one variable. Happy Life Years, a concept
brought by Dutch sociologist Ruut Veenhoven, combines self-reported
happiness with life expectancy. The
Happy Planet Index
Happy Planet Index combines it
with life expectancy and ecological footprint.
Happiness (GNH) is a concept introduced by the King of
Bhutan in 1972 as an alternative to GDP. Several countries have
already developed or are in the process of developing such an
index. Bhutan's index has led that country to limit the amount
of deforestation it will allow and to require that all tourists to its
nation must spend US$200 Allegedly, low-budget tourism and
deforestation lead to unhappiness.
After the military coup of 2006,
Thailand also instituted an index.
The stated promise of the new Prime Minister
Surayud Chulanont is to
make the Thai people not only richer but happier as well. Much like
Thailand releases monthly GNH data. The Thai GNH
index is based on a 1–10 scale with 10 being the most happy. As
of May 13, 2007, the Thai GNH measured 5.1 points. The index uses
poll data from the population surveying various satisfaction factors
such as, security, public utilities, good governance, trade, social
justice, allocation of resources, education and community
Australia, China, France and the United Kingdom are also
coming up with indexes to measure national happiness. The UK began
to measure national wellbeing in 2012. North Korea also announced
Happiness Index in 2011 through Korean Central
Television. North Korea itself came in second, behind #1 China.
Canada released the Canadian Index of Wellbeing (CIW) in 2011 to track
changes in wellbeing. The CIW has adopted the following working
definition of wellbeing: The presence of the highest possible quality
of life in its full breadth of expression focused on but not
necessarily exclusive to: good living standards, robust health, a
sustainable environment, vital communities, an educated populace,
balanced time use, high levels of democratic participation, and access
to and participation in leisure and culture
Ecuador's and Bolivia's new constitutions state the indigenous concept
of "good life" ("buen vivir" in Spanish, "sumak kawsay" in Quichua,
and "suma qamaña" in Aymara) as the goal of sustainable development.
Neoclassical, as well as classical economics, are not subsumed under
the term happiness economics although the original goal was to
increase the happiness of the people. Classical and neoclassical
economics are stages in the development of welfare economics and are
characterized by mathematical modeling.
Happiness economics represents
a radical break with this tradition. The measurement of subjective
happiness respectively life satisfaction by means of survey research
across nations and time (in addition to objective measures like
lifespan, wealth, security etc.) marks the beginning of happiness
Some have suggested that establishing happiness as a metric is only
meant to serve political goals. Recently there has been concern
that happiness research could be used to advance authoritarian
aims. As a result, some participants at a happiness conference in
Rome have suggested that happiness research should not be used as a
matter of public policy but rather used to inform individuals.
Even on the individual level there is discussion on how much effect
external forces can have on Happiness. Less than 3% of an individual's
level of happiness comes from external sources such as employment,
education level, marital status, and socioeconomic status. To go
along with this, four of the
Big Five Personality Traits
Big Five Personality Traits are
substantially associated with life satisfaction, openness to
experience is not associated. Having high levels of internal locus
of control lead to higher reported levels of happiness.
Even when happiness can be affected by external sources happiness has
high hedonic adaptation, specify some events such as an increase in
income, disability, unemployment, and loss (bereavement) only have
short-term (about a year) effects on a person's overall happiness
after a while happiness may return to levels similar to unaffected
What has the most influence over happiness are internal factors such
as genetics, personality traits, and internal locus of control It is
theorized that 50% of the variation in happiness levels is from
genetic sources and is known as the genetic set point. The genetic set
point is assumed to be stable over time, fixed, and immune to
influence or control. This goes along with findings that
well-being surveys have a naturally positive baseline.
With such strong internal forces on happiness is it is hard to have an
effect on a person's happiness externally. This in turn lends itself
back to the idea that establishing a happiness metric is only for
political gain and has little other use. To support this even further
it is believed that a country aggregate level of SWB can account for
more variance in government vote share than standard macroeconomic
variables, such as income and employment.
Bhutan GNH Index
Broad measures of economic progress
Disability-adjusted life year
Gender Development Index
Green national product
Law of Social Cycle
Legatum Prosperity Index
OECD Better Life Index
Progressive utilization theory
Social return on investment
World Values Survey
Bernard van Praag
Jan-Emmanuel De Neve
Anielski, Mark (2007). The
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Balance of payments
Depression (Great Depression)
General Theory of Keynes
Rate of profit
Economies of scale
Economies of scope
Expected utility hypothesis
General equilibrium theory
Returns to scale
Social choice theory
Supply and demand
Theory of the firm
Law and economics
Ancient economic thought
Austrian school of economics
Chicago school of economics
Notable economists and
thinkers within economics
Francis Ysidro Edgeworth
John Maynard Keynes
Robert Lucas Jr.
John von Neumann
Herbert A. Simon
Asia-Pacific Economic Cooperation
Economic Cooperation Organization
International Monetary Fund
Organisation for Economic Co-operation and Development