Happiness economics

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,^[2] as well as quality of life. Happiness findings have been described as a challenge to the theory and practice of economics.^[3] Nevertheless, furthering gross national happiness, as well as a specified Index to measure it, has been adopted explicitly in the Constitution of Bhutan in 2008, to guide its economic governance.

Metrology[edit]

Given its very nature, reported happiness is subjective.^[6] It is difficult to compare one person's happiness with another's.^[2] It can be especially difficult to compare happiness across cultures.^[2] 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 of happiness.^[2]


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.^[7] 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.


Micro-econometric happiness equations have the standard form: ${\displaystyle W_{it}=\alpha +\beta {x_{it}}+\epsilon _{it}}$.^[2] In this equation ${\displaystyle W}$ is the reported well-being of individual ${\displaystyle i}$ at time ${\displaystyle t}$, and ${\displaystyle x}$ is a vector of known variables, which include socio-demographic and socioeconomic characteristics.^[2]


Macro-econometric happiness has been gauged by some as Gross National Happiness, following Sicco Mansholt's 1972 introduction of the measure,^[8] and by others as a Genuine Wealth index. Anielski in 2008 wrote a reference definition on how to measure five types of capital: (1) human; (2) social; (3) natural; (4) built; and (5) financial.^[9]


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 is named after the Dutch university where this approach was developed. Other researchers included Arie Kapteyn and Aldi Hagenaars.^[10]


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,^[7] although this raises philosophical issues, for example about whether this can be treated as more reliable than reported subjective happiness.