Happiness economics
Happiness economics is an approach that assesses the quality of life and overall satisfaction of individuals within a community, focusing on how development impacts people's happiness. Unlike traditional metrics that rely heavily on demographic data like income and education, happiness economics incorporates subjective measures, such as personal freedom, leisure time, and life satisfaction. This framework acknowledges that wealthier countries often rank higher in happiness, yet it questions the adequacy of these comparisons when poorer communities might report higher life satisfaction despite having fewer material resources.
Originating from the concept of Gross National Happiness introduced in Bhutan, happiness economics has inspired similar initiatives in other nations, including Thailand's Green and Happiness Index and the United Nations' World Happiness Report. Researchers have explored the relationship between income and happiness, revealing that while increases in income can enhance overall life evaluation, other factors play crucial roles in daily happiness. However, the field faces criticism regarding potential misuse or oversimplification of happiness measures, with concerns about the validity of findings and the risk of neglecting marginalized groups. Despite these challenges, happiness economics continues to influence public policy, aiming to integrate well-being into sustainable development and social progress initiatives.
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Happiness economics
Happiness economics is a way of measuring the quality of life and life satisfaction among a group of people. When scholars and development planners use happiness economics, they are concerned with the outcome of development—whether development makes people’s lives better and happier. Research methods taken from economics, psychology, and sociology are used to calculate group or community happiness.
Brief History
There are many ways to measure development within a community. Traditionally, politicians and development planners have looked at demographic data such as income levels, education, and public health to compare different groups and nations. While these numbers allow for comparisons, they reveal little about how members of a population perceive their own lives. As some scholars have indicated, it is problematic that wealthy countries will almost always be ranked very high in these calculations while members of a poorer community may not have as many material goods but might be very satisfied with their lives. As a result, happiness economics has been proposed as a method to measure and compare the overall happiness of a population or group.
Happiness economics does include traditional demographic information, but it also accounts for a community’s perception of freedom and self-determination. This calculation pays attention to the amount of time that community members are able to devote to leisure activities and their overall satisfaction with life. In general, richer countries are ranked as happier countries.
In 1971, Bhutanese king Jigme Singye Wangchuck introduced gross national happiness (GNH) as the method for measuring development in Bhutan. This announcement was made partially to account for the unique social and political situation of Bhutan. From its inception, the GNH philosophy was guided by four values: sustainable development, cultural preservation, environmental stewardship, and good governance. These values were then enhanced and better explained by groups of international scholars. By 2010 the Centre for Bhutan Studies & GNH Research had developed a sophisticated set of measurements, including a long interview that can be administered to individuals, creating a data set that enables cross-cultural comparisons. This measurement is specific to Bhutan in that it measures cultural and religious values such as minding etiquette and considering karma. However, the measurement can be modified to apply to nations with other cultural and religious values.
Other nations have followed Bhutan’s lead in an effort to measure citizen happiness. For example, Thailand utilizes a Green and Happiness Index, adopted in 2007. In France, the Commission on the Measurement of Economic Performance and Social Progress was tasked with creating an international system that measures human well-being in 2008. Then, in 2012, the United Nations released its inaugural World Happiness Report. This report has prompted some governments to begin different types of development projects that are aimed at happiness alongside or instead of economic growth.
In 2010, researchers Daniel Kahneman and Angus Deaton published their analysis of 450,000 responses to the Gallup-Healthways Well-Being Index. Kahneman and Deaton found that the respondents were increasingly happy as their income increased until they reached between $50,000 and $75,000 in annual income. After that point, while respondents' overall life evaluation increased with their incomes, their daily happiness remained stable. Kahneman and Deaton's study was influential and often cited by happiness economists in the 2010s and 2020s who warned that, after a certain income level, people stop gaining additional happiness, even if their personal wealth increases.
Researchers continued to investigate the relationship between wealth and happiness in the 2020s. In 2024, Matthew A. Killingsworth, a senior research fellow at the University of Pennsylvania's Wharton School, published research that challenged the idea that happiness plateaus once an individual reaches a middle-class income. Based on data Killingsworth collected through his Trackyourhappiness.org research project and a smaller sample of individuals with a median net worth between $3 million and $7.9 million, he found that the happiness gap between middle-income and wealthy respondents was almost three times greater than the gap between low-income and middle-income respondents.
Happiness Economics Today
While many governments have embraced happiness economics, critics have warned that this new form of measurement can be manipulated or abused by governments. There is a risk that a nation might embark on a policy that makes most of the population happy but severely harms a minority group. Some policymakers have argued that focus on GNH distracts from a country’s entrenched economic and political problems.
Others worry that the findings of a happiness study might be unreliable. However, psychologists who have monitored these studies find that individuals give very similar answers about their overall happiness, even if they report having an unusually depressing day when they are interviewed. Some scholars have gone so far as to verify individual answers to happiness surveys. Thus, if someone participated in a happiness study, they would answer interview questions about their overall happiness. Then the researcher would conduct independent interviews with the person’s friends to verify those answers. In this way, researchers can control for situations when respondents might just be having a bad day and are also better able to understand the answers given to their open-ended questions.
Scholars and development researchers plan to continue using happiness economics to shape public welfare programs, sustainable development programs, and education policies. Academic journals such as the Journal of Happiness Studies have been developed to record and study the ways that happiness is understood and experienced across the world and its policy implications. Economists such as Nobel Prize winner Amartya Sen have advanced the study of development economics by focusing on ethical considerations rather than pure economic growth.
Bibliography
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Kahneman, Daniel, and Angus Deaton. "High Income Improves Evaluation of Life but Not Emotional Well-Being." PNAS, vol. 107, no. 38, 2010, pp. 16489–93, doi.org/10.1073/pnas.1011492107. Accessed 3 Dec. 2024.
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"World Happiness Report 2024." World Happiness Report, Wellbeing Research Centre, University of Oxford, 2024, worldhappiness.report. Accessed 3 Dec. 2024.