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Recent Developments in the Economics of Happiness: A Selective Overview

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Author Info

  • Stutzer, Alois

    ()
    (University of Basel)

  • Frey, Bruno S.

    ()
    (University of Zurich)

Abstract

What makes people happy in life? This is a crucial question that has the potential to shake up economics. In recent years, the dissatisfaction with the understanding of welfare in economics together with the new opportunities to empirically study people's subjective wellbeing have spurred impressive and stimulating new research in the often called dismal science. The economics of happiness has emerged as one of the most thriving areas in current economic research. This introductory chapter refers to important contributions to the economics of happiness that characterize the recent developments in the area. First, we refer to reviews of the literature, the measurement and the relationship of happiness research to welfare economics. Second, we emphasize four factors from the large literature on the determinants of happiness in economics, i.e. income, employment, social capital and health. In fact, the main body of research in this new area is on the preconditions or covariates of high individual well-being. Third, important studies applying the so-called Life Satisfaction Approach as an alternative valuation approach are discussed. Fourth, we point to contributions that elaborate on the understanding of utility in terms of people's adaptation to circumstances and their difficulties in predicting future utility. Fifth, we provide references to the controversial question regarding the policy consequences of this new development.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7078.

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Length: 19 pages
Date of creation: Dec 2012
Date of revision:
Publication status: published in: Bruno S. Frey and Alois Stutzer (eds.), Recent Developments in the Economics of Happiness, Cheltenham: Edward Elgar, 2013, ix-xxiii
Handle: RePEc:iza:izadps:dp7078

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Keywords: Life Satisfaction Approach; individual welfare; happiness; subjective well-being;

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References

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Cited by:
  1. Fabio Sabatini & Francesco Sarracino, 2014. "Online networks and subjective well-being," Econometica Working Papers wp54, Econometica.
  2. Ambrey, Christopher L. & Chan, Andrew Yiu-Chung & Fleming, Christopher M., 2013. "Estimating the cost of air pollution in South East Queensland: An application of the life satisfaction non-market valuation approach," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152133, Australian Agricultural and Resource Economics Society.
  3. DiMaria, Charles Henri & Peroni, Chiara & Sarracino, Francesco, 2014. "Happiness matters: the role of well-being in productivity," MPRA Paper 56983, University Library of Munich, Germany.
  4. Ambrey, Christopher L. & Fleming, Christopher M. & Chan, Andrew Yiu-Chung, 2014. "Estimating the cost of air pollution in South East Queensland: An application of the life satisfaction non-market valuation approach," Ecological Economics, Elsevier, vol. 97(C), pages 172-181.

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