On the Problem of Measuring Happiness

16 Pages Posted: 5 Feb 2011

Date Written: February 3, 2011


The question of how to measure and aggregate happiness is more than a century old. In recent years, its relevance has risen due to efforts to replace the GDP with an index more indicative of well-being, though such efforts are fraught with serious conceptual problems. After briefly recalling these problems, we suggest to address them by using instead of the common ordinal utility an alternative quantity that is maximized in economic transactions. This quantity counts the number of future possibilities a commodity opens. The big advantage of this approach is that, in principle, the number of possibilities is an objective measure which allows for intra- and interpersonal comparison. We lay out the framework of the model and then discuss its relevance for social welfare. While we do here not explicitly compute a measure supplementing the GDP, we sketch how this could be done in practice.

Keywords: Cardinal Utility, Social Welfare Function, Gross Domestic Product

Suggested Citation

Hossenfelder, Sabine, On the Problem of Measuring Happiness (February 3, 2011). Available at SSRN: https://ssrn.com/abstract=1754423 or http://dx.doi.org/10.2139/ssrn.1754423

Sabine Hossenfelder (Contact Author)

Nordita ( email )

Roslagstullsbacken 23
Stockholm, 106 91

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