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.
What is ‘Happiness Economics’
The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth. Happiness economics attempts to use econometric analysis to discover what factors increase and decrease human well-being and quality of life. One major study of happiness economics has been conducted by the Europe-based Organization for Economic Cooperation and Development. The OECD ranked happiness in its 34 member countries, based on factors such as housing, income, jobs, education, environment, civic engagement and health. The study’s purpose is to help governments design better public policies.
Explaining ‘Happiness Economics’
Happiness research has found that people in richer countries with good institutions tend to be happier than people in poorer countries with bad institutions. At a certain point, increases in annual income no longer bring greater happiness. This is estimated to fall somewhere between $75,000 and $120,000. Working more increases happiness up to the point where people feel overworked by consistently long hours, and unemployment almost always makes people very unhappy, as does poor health. Work commutes longer than about 20 minutes also make us unhappy, and so does high-interest consumer debt.
- Financial distress and happiness of employees in times of economic crisis – www.tandfonline.com [PDF]
- Inequality and happiness – www.oxfordhandbooks.com [PDF]
- Close relationships and happiness – www.oxfordhandbooks.com [PDF]
- Some uses of happiness data in economics – www.aeaweb.org [PDF]
- What can economists learn from happiness research? – www.aeaweb.org [PDF]
- Happiness and economic performance – academic.oup.com [PDF]