The Economics of Happiness

The Economics of Happiness is a relatively new discipline which is trying to find an answer to the question: “What makes people happy?” Happiness is understood as “subjective well-being” which is defined simply as a feeling of satisfaction with individual’s own life. Most of research in Economics of Happiness was trying to identify determinants of subjective well-being. The most usual approach consists in statistical enquiry in which respondents are asked how satisfied they feel with their life (measured usually on the scale for example from 1 to 10). This makes possible to quantify “happiness” and then apply statistical and econometric methods. Surprisingly, this approach has many applications and has so far yielded many new insights. I will now mention one of them which was achieved by Swiss economist Bruno Frey about happiness in relation to marriage and is shown in this graph (SWB is measured on the scale from 1 to 10):

Marriage and happiness

For those who are disappointed by this rather gloomy result, I have also some good news. It seems that the shape of the curve depends on how similar the partners engaged in relationship are. If their personal characteristics are not too different, the shape of the curve is not so sharp. Therefore the satisfaction does not decrease so quickly in this case. The following two graphs show the influences of the size of differences in wage and education on satisfaction with marriage. The dashed curve showes the situation when difference between partners is small and the solid line the case when this difference is large:

Marriage and Happiness

Here you can also find a very interesting article which describes how you can get from happiness to the value of clean air:

References: Frey, B.S.: Happiness. A Revolution in Economics. MIT Press, 2008


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One response to “The Economics of Happiness

  1. In my bachelor`s thesis I was writing about life of benedictine monks and functioning of benedictine monasteries from the perspective of economics of happiness. I visited one benedictine monastery near Cologne in 2006 and this is where I found the inspiration. In the thesis, I argued that determinants of happiness in case of monks were strong emotional identification with community (argument based on Smith`s notion of mutual correspondence of sentiments), religion and their engagement in charity work. I also examined the corporate governance of a monastery and the way how the everyday life looks like… Maybe I will continue with this in my Master`s thesis

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