Time Use and the Pursuit of Happiness

We develop a new economic framework to study the relationship between how we spend our time and our well-being. Our key insight is that while we may pursue enjoyable activities, they do not all equally contribute to happiness. Moreover, even if we understand what we enjoy, we may not fully understand what makes us happy; we learn this over time. We incorporate these ideas into the standard model of time allocation and introduce the notion of psychic capital, a mental stock that facilitates happiness and is augmented by constructive uses of time. This allows us to connect basic tools from price theory to recent empirical findings in the study of well-being and centuries old ideas in moral philosophy. We under-invest in salubrious activities because we do not fully understand how we derive happiness. The relative prices of heterogeneous activities determine the extent of this under-investment and the speed of our learning. Our model explains several puzzles in the economics of happiness such as the Easterlin paradox and the lifecycle trajectory of subjective well being. We use data from the American Time Use Survey to present a variety of evidence in support of this claim and to show that work is most responsible for increases in well-being in older ages.