Happiness Economics: Recommended Reading
I introduced the field of happiness economics here. Here I offer a recommend reading list for those looking to learn more about the field. This comes from
If you're only going to read one paper, read "Building a Better Theory of Well-Being" (pdf) by Richard Easterlin, who . It critiques psychology's "setpoint" theory and economics's "more is better" theory using results from self-reported happiness surveys. Setpoint theory says that all individuals have a "set point" of happiness that we usually exist at. Events can make our happiness level go up temporarily, but we eventually adjust to the new circumstances and revert back to the set point. "More is better" theory says that the more income we have, the better off we are. Easterlin finds that after certain events such as serious disability or marriage, happiness does not revert back to a set point. Also, while happiness increases with income when looking at a fixed point in time, it does not increase as income increases over time. (See "Well-Being Over Time in Britain and the USA" below.)
One minor point of disagreement I have with Easterlin is his statement "If the goal of public policy is to improve subjective well-being (SWB), this [setpoint] theory leads to a nihilistic view of economic and social policy." (page 4). Easterlin is wrong on two points. First, setpoint theory allows for temporary changes in happiness; policy using this model could strive to maximize happiness gains from those changes. Second, policy could strive to maximize total life-years (total population times average life duration) of individuals whose set point is greater than zero. (For more on zero utility, see the Utility Curves post.) For individuals whose set point is less than zero, euthanasia would be in order.
"Well-Being Over Time in Britain and the USA" (pdf) by Andrew Oswald and David Blanchflower. This is a key source for "Building a Better Theory of Well-Being" (above). The key finding is: "Reported levels of happiness have been dropping through time in the United States. Life satisfaction has run approximately flat in Great Britain. In a period of increasing material prosperity -- our data cover the period from the early 1970s to the late 1990s -- these results may surprise some observers." (page 20 of article/22 of pdf)
Hypertension and Happiness across Nations (pdf), also by Andrew Oswald and David Blanchflower. This is an effort to gauge how comparable self-reported happiness is across countries, given their differences in language and culture. It uses the assumption that hypertension (high blood pressure) should be (inversely) correlated with happiness. Since blood pressure measurements are independent of nationality, they could be used to determine how, if at all, happiness reports should be scaled when comparing between countries. From the abstract: "Using data on 15,000 individuals in 16 countries, it provides some of the first evidence that happier nations report systematically fewer problems of high blood-pressure. The paper’s results are consistent with, and seem to offer a small step toward the validation of, the observed cross-national happiness patterns."
The encyclopedic compilation of happiness economics appears to be Well-Being: The Foundations of Hedonic Psychology, Kahneman, Diener, and Schwarz, eds., New York: Russell Sage, 1999. (ISBN: 0871544245) I have not read this work, but certainly would like to. Also, on a personal note, Kahneman is somewhat of a role model/hero for me, being a Nobel Laureate in economics (for somewhat unrelated work in the psychology-economics connection) despite not being trained in economics.
The foundational work of happiness economics (i.e. the work that got this all started) is "Does Economic Growth Improve the Human Lot?" by Richard Easterlin, which appears in Nations and Households in Economic Growth: Essays in Honor of Moses Abramovitz, Paul A. David and Melvin W. Reder, eds., New York: Academic Press, Inc., 1974. (ISBN: 0122050509)
If you're only going to read one paper, read "Building a Better Theory of Well-Being" (pdf) by Richard Easterlin, who . It critiques psychology's "setpoint" theory and economics's "more is better" theory using results from self-reported happiness surveys. Setpoint theory says that all individuals have a "set point" of happiness that we usually exist at. Events can make our happiness level go up temporarily, but we eventually adjust to the new circumstances and revert back to the set point. "More is better" theory says that the more income we have, the better off we are. Easterlin finds that after certain events such as serious disability or marriage, happiness does not revert back to a set point. Also, while happiness increases with income when looking at a fixed point in time, it does not increase as income increases over time. (See "Well-Being Over Time in Britain and the USA" below.)
One minor point of disagreement I have with Easterlin is his statement "If the goal of public policy is to improve subjective well-being (SWB), this [setpoint] theory leads to a nihilistic view of economic and social policy." (page 4). Easterlin is wrong on two points. First, setpoint theory allows for temporary changes in happiness; policy using this model could strive to maximize happiness gains from those changes. Second, policy could strive to maximize total life-years (total population times average life duration) of individuals whose set point is greater than zero. (For more on zero utility, see the Utility Curves post.) For individuals whose set point is less than zero, euthanasia would be in order.
"Well-Being Over Time in Britain and the USA" (pdf) by Andrew Oswald and David Blanchflower. This is a key source for "Building a Better Theory of Well-Being" (above). The key finding is: "Reported levels of happiness have been dropping through time in the United States. Life satisfaction has run approximately flat in Great Britain. In a period of increasing material prosperity -- our data cover the period from the early 1970s to the late 1990s -- these results may surprise some observers." (page 20 of article/22 of pdf)
Hypertension and Happiness across Nations (pdf), also by Andrew Oswald and David Blanchflower. This is an effort to gauge how comparable self-reported happiness is across countries, given their differences in language and culture. It uses the assumption that hypertension (high blood pressure) should be (inversely) correlated with happiness. Since blood pressure measurements are independent of nationality, they could be used to determine how, if at all, happiness reports should be scaled when comparing between countries. From the abstract: "Using data on 15,000 individuals in 16 countries, it provides some of the first evidence that happier nations report systematically fewer problems of high blood-pressure. The paper’s results are consistent with, and seem to offer a small step toward the validation of, the observed cross-national happiness patterns."
The encyclopedic compilation of happiness economics appears to be Well-Being: The Foundations of Hedonic Psychology, Kahneman, Diener, and Schwarz, eds., New York: Russell Sage, 1999. (ISBN: 0871544245) I have not read this work, but certainly would like to. Also, on a personal note, Kahneman is somewhat of a role model/hero for me, being a Nobel Laureate in economics (for somewhat unrelated work in the psychology-economics connection) despite not being trained in economics.
The foundational work of happiness economics (i.e. the work that got this all started) is "Does Economic Growth Improve the Human Lot?" by Richard Easterlin, which appears in Nations and Households in Economic Growth: Essays in Honor of Moses Abramovitz, Paul A. David and Melvin W. Reder, eds., New York: Academic Press, Inc., 1974. (ISBN: 0122050509)
posted by Seth Baum at 10:35 AM
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