Évf. 13 szám 1 (2014)
Kutatás közben

A literature review of Happiness and Economics and guide to needed research

Megjelent június 16, 2014
Thomas Wiese
University of Debrecen Doctoral School of Economics
PDF (English)


Wiese, T. (2014). A literature review of Happiness and Economics and guide to needed research. Competitio, 13(1), 117–131. https://doi.org/10.21845/comp/2014/1/8

Happiness and Economics as a new branch of behavioural economics has had a major impact on economic theory and economic policy: Several studies have been published in the last 20 years in leading journals. Furthermore, several governments have decided to collect data about the well-being of their citizens. The author claims that utility cannot only be measured by the choices individuals do: Reported happiness and life satisfaction data is also an acceptable empirical estimate for individual utility. Consequently, happiness research can bear new knowledge and important understanding of human welfare. Therefore, this paper gives an overview of the existing literature. Methods and approach of scholars is critically analysed and shortcomings are discussed. Thereafter, findings on major economic issues like growth, unemployment and inflation are presented. Besides, governmental policy and implications for society are debated. Lastly, future research possibilities are mentioned.

Journal of Economic Literature (JEL) Classification: D60 D63 I31

  1. Ahuvia, C.A. - Friedman, C.D. (1998): Income, consumption, and subjective well-being: Toward a composite macromarketing model. Journal of Macromarketing, 18(2), 153-168.
  2. Allais, M. (1953): Le comportement de l’homme rationnel devant le risqué, critique des postulats et axioms de l’école Americaine. Econometrica 21: 503–546.
  3. Arrow, K. (1951): Social Choice and Individual Values. Wiley.
  4. BBC (2010): Plan to measure happiness ‘not woolly’ – Cameron, http://www.bbc.co.uk/news/uk-11833241, 30.09.2013.
  5. Bentham, J. (1789 [1996]). An Introduction to the Principles of Morals and Legislation. Clarendon.
  6. Björklund, A. – Eriksson, T. (1998): Unemployment and Mental Health: A Survey of Nordic Research. Scandinavian Journal of Social Welfare 7: 219–235.
  7. Blanchflower, D. – Oswald, A. 2004. Well-Being over Time in Britain and the USA. Journal of Public Economics 88: 1359–1386.
  8. Brennan, G. – Pettit, P. 2004. The Economy of Esteem: An Essay on Civil and Political Science. Oxford University Press.
  9. Brickman, P. – Coates, D. - Janoff-Bulman, R.. 1978. Lottery Winners and Accident Victims: Is Happiness Relative? Journal of Personality and Social Psychology 36, no. 8: 917–927.
  10. Brück, T. – Stephan, A. 2006. Do Eurozone Countries Cheat with Their Budget Deficit Forecasts? Kyklos 59: 3–16.
  11. Carr, A. 2003. Positive Psychology: The Science of Happiness and Human Strength. Routledge.
  12. Clark, A. – Oswald, A. 1994. Unhappiness and Unemployment. Economic Journal 104, no. 424: 648–659.
  13. Clark, A. – Oswald, A. 1996. Satisfaction and Comparison Income. Journal of Public Economics 61, no. 3: 359–381.
  14. Clark, A - Diener, E. - Georgellis, Y. – Lucas, R. 2006. Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis. Working paper, CNRS and DELTAFédération Jourdan.
  15. Clark, A. - Frijters, P. - Shields, M. 2008. Relative income, happiness, and utility: An explanation for the Easterlin paradox and other puzzles. Journal of Economic Literature, 95-144.
  16. Csikszentmihalyi, M. – Hunter, J. 2003. Happiness in Everyday Life: The Uses of Experience Sampling. Journal of Happiness Studies 4: 185–199.
  17. Darity, W. – Goldsmith, A. 1996. I. Journal of Economic Perspectives 10, no. 1: 121–140.
  18. De Botton, A. 2004. Status Anxiety. Hamish Hamilton.
  19. Di Tella, R. – MacCulloch, R. – Oswald, A. 2001. Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness. American Economic Review 91, no. 1: 335–341.
  20. Di Tella, R. - MacCulloch, R. - Oswald, A. 2003. The Macroeconomics of Happiness. Review of Economics and Statistics 85, no. 4: 809–827.
  21. Di Tella, R. - MacCulloch, R. 2005. Gross National Happiness as an Answer to the Easterlin Paradox? Working Paper, Harvard Business School.
  22. Diener, E. - Suh, E. - Lucas, R. – Smith, H. 1999. Subjective Well-Being: Three Decades of Progress.
  23. Psychological Bulletin 125, no. 2: 276–303.
  24. Diener, E. - Diener, M. - Diener, C. 1995: Factors predicting the subjective well-being of nations. Journal of personality and social psychology, 69(5), 851.
  25. Diener, E. – Biswas, R. - Diener, R. 2002. Will money increase subjective well-being? A literature review and guide to needed research. Social Indicators Research, 57, 119-169.
  26. Easterlin, R. 1974. Does Economic Growth Improve the Human Lot? Some Empirical Evidence. In Nations and Households in Economic Growth: Essays in Honour of Moses Abramowitz, ed. P. David and M. Reder.
  27. Academic Press.
  28. Easterlin, R. 2001. Income and Happiness: Towards a Unified Theory. Economic Journal 111: 465–484.
  29. Easterlin, R. - McVey, L. - Switek, M. - Sawangfa, O. - Zweig, J. 2010. The happiness–income paradox
  30. revisited. Proceedings of the National Academy of Sciences, 107(52), 22463-22468.
  31. Edgeworth, F. 1881. Mathematical Psychics: An Essay on the Application of Mathematics to the Moral Sciences. Kegan Paul.
  32. Ellsberg, D. 1961. Risk, Ambiguity and the Savage Axiom. Quarterly Journal of Economics 75: 643–669.
  33. Elster, J. 1998. Emotions and Economic Theory. Journal of Economic Literature 36, no. 1: 47–74.
  34. Fehr, E. – Gächter, S. 1998. Reciprocity and Economics. The Economic Implications of “Homo Reciprocans.” European Economic Review 42: 845–859.
  35. Fehr, E. – Gächter, S. 2000. Fairness and Retaliation: The Economics of Reciprocity. Journal of Economic Perspectives 14: 159–181.
  36. Fehr, E.- Schmidt, K. 2003. Theories of Fairness and Reciprocity—Evidence and Economic Applications. In Advances in Economics and Econometrics—8th World Congress, ed. M. Dewatripont, L. Hansen, and
  37. S. Turnovsky. Cambridge University Press.
  38. Fischer, S. 1981. Towards an Understanding of the Costs of Inflation: II. Carnegie- Rochester Conference Series on Public Policy 15: 5–41.
  39. Frank, R. 1985. Choosing the Right Pond. Oxford University Press.
  40. Frank, R. 1999. Luxury Fever: Why Money Fails to Satisfy in an Era of Excess. Free Press.
  41. Frederick, S. – Loewenstein R. 1999. Hedonic Adaptation. In Well-Being: The Foundations of Hedonic Psychology, ed. D. Kahneman, E. Diener, and N. Schwarz. Russell Sage Foundation.
  42. Freeman, A. M., III. 2003. The Measurement of Environmental and Resource Values: Theory and Methods. Resources for the Future.
  43. Frey, B. – Stutzer, A. 2002a. Happiness and Economics: How the Economy and Institutions Affect Well-Being. Princeton University Press.
  44. Frey, B. – Stutzer, A. 2002b. What Can Economists Learn from Happiness Research? Journal of Economic Literature 40, no. 2: 402–435.
  45. Frey, B. – Stutzer, A. 2008. Happiness - A revolution in Economics. The MIT Press, Cambridge. Furnham, A. 1998. The psychology of money. Routledge.
  46. Gächter, S. 2007. Conditional Cooperation: Behavioral Regularities from the Lab and the Field and Their Policy Implications. In Economics and Psychology: A Promising New Cross-Disciplinary Field, ed. B. Frey and A. Stutzer. MIT Press.
  47. Hammond, P. 1991. Interpersonal Comparisons of Utility: Why and How They Are and Should Be Made. In Interpersonal Comparisons of Well-Being, ed. J. Elster and J. Roemer. Cambridge University Press.
  48. Hicks, R. J. 1939: Value and Capital. London. Oxford University Press.
  49. Irwin, F. 1944. The Realism of Expectations. Psychological Review 51: 120–126.
  50. Jameson, M. 1988. Practical Guide to Creative Accounting. Kogan Page.
  51. Kahneman, D. 1999. Objective Happiness. In Well-Being: The Foundations of Hedonic Psychology, ed. D.
  52. Kahneman - E. Diener - N. Schwarz. Russell Sage Foundation.
  53. Kahneman, D. - Krueger, A. - Schkade, D. - Schwarz, N. – Stone, A. 2004. Toward National Well-Being Accounts. American Economic Review 94, no. 2: 429–434.
  54. Keynes, J. M. 1938: Letter to Roy F. Harrod, published in Keynes, vol. XIV, pp. 299 – 301. In: Economia (2011):
  55. Keynes to Harrod http://economia.unipv.it/harrod/edition/editionstuff/rfh.346.htm [16.12.2012].
  56. Korpi, T. 1997. Is Well-Being Related to Employment Status? Unemployment, Labor Market Policies and Subjective Well-Being among Swedish Youth. Labour Economics 4, no. 2: 125–147.
  57. Lane, R. 1998. The Joyless Market Economy. In Economics, Values, and Organization, ed. A. Ben-Ner and L. Putterman. Cambridge University Press.
  58. Layard, R. 1980. Human Satisfaction and Public Policy. Economic Journal 90: 737–750.
  59. Layard, R. 2003. Happiness: Has social science a clue? London: Centre for Economic Performance.
  60. Layard, R. 2005. Happiness: Lessons from a New Science. Penguin.
  61. Layard, R. 2006. Happiness and Public Policy: A Challenge to the Profession. Economic Journal 116: C24–C33.
  62. Layard, R. 2007. Happiness and Public Policy: A Challenge to the Profession. In Economics and Psychology: A Promising New Cross-Disciplinary Field, ed. B. Frey and A. Stutzer. MIT Press.
  63. Lehtonen, P. 2000. Forest Policy Review, Bhutan [World Bank (IDA) and Swiss Development Co-operation (SDC)].
  64. Loewenstein, G. - O’Donoghue, T. – Rabin, M. 2003. Projection Bias in Predicting Future Utility. Quarterly Journal of Economics 118: 1209–1248.
  65. Lucas, R. Jr. 1981. Discussion of Stanley Fischer, “Towards an Understanding of the Costs of Inflation: II.” Carnegie-Rochester Conference Series on Public Choice 15: 43–52.
  66. Myers, D. 2000. The Funds, Friends, and Faith of Happy People. American Psychologist 55, no. 1: 56–67.
  67. Nettle, D. 2005. Happiness: The Science Behind Your Smile. Oxford University Press.
  68. New Scientist. 2003. Reasons to Be Cheerful. October 4–10: 44–47.
  69. New York Times (2008): Maybe Money Does Buy Happiness After All http://www.nytimes.com/2008/04/16/business/16leonhardt.html?_r=0 [13.05.2013].
  70. Ng, Y. 1996. Happiness Surveys: Some Comparability Issues and an Exploratory Survey Based on Just Perceivable Increments. Social Indicators Research 38, no. 1: 1–27.
  71. Osterloh, M – Frey, B. 2000. Motivation, Knowledge Transfer, and Organizational Forms. Organization Science 11, no. 5: 538–550.
  72. Osterloh, M – Frey, B. 2004. Corporate Governance for Crooks? The Case for Corporate Virtue. In Corporate Governance and Firm Organization, ed. A. Grandori. Oxford University Press.
  73. Osterloh, M – Frey, B. 2006. Shareholders Should Welcome Knowledge Workers as Directors. Journal of Management and Governance 10, no. 3: 325–345.
  74. Persky, J. 1995. Retrospectives: The Ethology of Homo Economicus, The Journal of Economic Perspectives, 9(2), 221-231.
  75. Ravallion, M. – Lokshin, M. 2001. Identifying Welfare Effects from Subjective Questions. Economica 68, no. 271: 335–357.
  76. Sacks, D. – B. Stevenson – J. Wolfers (2010): Subjective well-being, income, economic development and growth. National Bureau of Economic Research (No. w16441).
  77. Sen, A. 1986. The Standard of Living. In Tanner Lectures on Human Values, volume VII, ed. S. McMurrin. Cambridge University Press.
  78. Shiller, R. 1997. Why Do People Dislike Inflation? In Reducing Inflation: Motivation and Strategy, ed. C. Romer and D. Romer. University of Chicago Press.
  79. Schwarze, J. - Winkelmann, R. 2005. What Can Happiness Research Tell Us about Altruism? Evidence from the German Socio-Economic Panel. Discussion Paper 1487, IZA (Institute for the Study of Labor), Bonn.
  80. Seligman, M. 2002. Authentic Happiness. Free Press.
  81. Sirgy, M. J. 1997. Materialism and Quality of Life. Social Indicators Research 43, no. 3: 227–260.
  82. Stevenson, B. - Wolfers, J. 2008: Economic growth and subjective well-being: Reassessing the Easterlin paradox National Bureau of Economic Research.
  83. Stevenson, B. - Wolfers, J. 2013: Subjective Well-Being and Income: Is There Any Evidence of Satiation? National Bureau of Economic Research.
  84. Szondy, M. 2004: A szubjektív jóllét és a törekvések kapcsolata késő serdülőkorban. Alkalmazott Pszichológia. 6(4), pp. 53 – 72.
  85. The Telegraph (2009): Nicolas Sarkozy wants to measure economic success in ‘happiness’, http://www.telegraph.co.uk/news/worldnews/europe/france/6189530/Nicolas-Sarkozy-wants-to-measureeconomic-success-in-happiness.html, 30.09.2013.
  86. Van Praag, B. – Baarsma, B. 2004. Using Happiness Surveys to Value Intangibles: The Case of Airport Noise. Economic Journal 115, no. 500: 224–246.
  87. Van Praag, B. – Frijters, P. 1999. The Measurement of Welfare and Well- Being: The Leyden Approach. In Well-Being: The Foundations of Hedonic Psychology, ed. D. Kahneman, E. Diener, and N. Schwarz. Russell Sage Foundation.
  88. Veenhoven, R. 1991. Is happiness relative? Social Indicators Research, 24(1), 1-34.
  89. Wiese, T. 2014a. Analysis of the Trend Growth of GDP and Life Satisfaction in the EMU. Accepted in (2013) and forthcoming in Acta Oeconomica.
  90. Wiese, T. 2014b. Explanation of the Trend Growth of GDP and Life Satisfaction in the EMU: The Impact of Welfare Regimes. Accepted in (2014) and forthcoming in Society and Economy.
  91. Winkelmann, L. - Winkelmann, R. 1998. Why Are the Unemployed So Unhappy? Evidence from Panel Data. Economica 65, no. 257: 1–15.