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Happiness, Freedom and Control

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  • Paolo Verme

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Abstract

How do people value freedom of choice? Drawing on economics and psychology the paper provides an hypothesis and empirical evidence on how individuals may value freedom of choice and derive utility from it. It is argued that the degree of perceived control that individuals have over choice - a construct known as the locus of control in psychology - regulates how we value freedom of choice. People who believe that the outcome of their actions depends on internal factors such as effort and skills (the 'internals') have a greater appreciation of freedom of choice than people who believe that the outcome of their actions depends on external factors such as fate or destiny (the 'externals'). We find some evidence in support of this hypothesis using a combination of all rounds of the World and European Values Surveys. A variable that measures freedom of choice and the locus of control is found to predict life satisfaction better than any other known factor such as health, employment, income, marriage or religion, across countries and within countries. We show that this variable is not a proxy of happiness and measures well both freedom of choice and the locus of control. 'Internals' are found to appreciate freedom of choice more than 'externals' and to be happier. These findings have important implications for individual utility, social welfare and public policies.

Suggested Citation

  • Paolo Verme, 2009. "Happiness, Freedom and Control," Post-Print hal-00693818, HAL.
  • Handle: RePEc:hal:journl:hal-00693818
    DOI: 10.1016/j.jebo.2009.04.008
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00693818
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    More about this item

    Keywords

    D1; D6; D7; D9; H4; O1; Happiness; Utility; Freedom of choice; Locus of control;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D6 - Microeconomics - - Welfare Economics
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • H4 - Public Economics - - Publicly Provided Goods
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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