The Economics of Happiness

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The Economics of Happiness

The Declaration of Independence of the United States guarantees Americans the right to life, liberty, and the pursuit of happiness.  But nowhere does it say what happiness is or how to get it.

In fact, a wide variety of things we do in society are based on assumptions about what makes us happy, when in fact most people don't really know the answer.  As reported in The Boston Globe,1
scientific studies demonstrate that most people are poor at predicting what will bring them happiness and remembering how happy or unhappy various events made them.

Common assumptions about happiness were first challenged by a paper published in 1978 in the Journal of Personality and Social Psychology.2  It compared the happiness levels of people who had been paralyzed in an accident with people who had won the lottery.  Lottery winners were no happier than a control group.  While people who were paralyzed were not as happy as the control group, the difference wasn't nearly as big as the researchers — or the general public — expected.

There tends to be a kind of "homeostasis of happiness" in which various events can make us feel happier temporarily, but then our mood returns to a baseline level.  Similarly, events can make us unhappy for a while, but most of these effects are temporary, as well. 

This was borne out in a famous Harvard study that followed 268 male students for 72 years.  Although many of the men had endured negative and even catastrophic events in their lives, they consistently rated their global happiness as high and few said they would change many things in their lives. 

A comprehensive book on happiness was published in 2008 by Arthur C. Brooks, a professor of business and government policy at Syracuse University.  Titled Gross National Happiness,3 the book details some surprising findings about happiness.  Here are six of the most interesting: 

  • Political conservatives are nearly twice as happy on average as political liberals, but both are happier than self-defined "moderates."
  • Marriage is one of the few things that consistently make people happy.
  • Income inequality has little to do with happiness — or unhappiness. 
  • Giving money to charity makes people happier than having lots of it.
  • Work makes people happier than leisure time.
  • Ninety percent of Americans actually like their jobs. 

All this research into the "nature and causes of happiness" has been having an influence in many areas of life, most notably the law...

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