What can economists learn from happiness research?

Abstract

Happiness is generally considered an ultimate goal of life; virtually everyone wants to be happy. It follows that economics is – or should be – about individual happiness; in particular, how do economic growth, unemployment and inflation, and institutional factors such as governance, affect individual well-being. Happiness is generally considered an ultimate goal of life; virtually everyone wants to be happy. It follows that economics is – or should be – about individual happiness; in particular, how do economic growth, unemployment and inflation, and institutional factors such as governance, affect individual well-being. In addition to this intrinsic interest, there are important reasons for economists to consider happiness research. The first is economic policy. Happiness research can also help us understand the formation of subjective well-being. This paper discusses the relationship between happiness and utility, and argues that reported subjective well-being is a satisfactory and empirical approximation of individual utility.