Economics and the Study of Individual Happiness
20 Pages Posted: 31 Oct 2013
Date Written: December 21, 2009
Within economics a remarkable new development is underway: the theoretical and empirical economic analysis of individual well-being or happiness. This development transcends the borders of standard economics in various ways. The economics of happiness argues that the measurable concepts of happiness or life satisfaction allow us to proxy the theoretical concept of utility in a satisfactory way. This approach provides new insights into how human beings value goods and services and more general social and economic conditions, and suggests new policies that significantly deviate from what has been proposed so far. These developments could even be called "revolutionary" in that they change the way society is looked at from an economics point of view (Frey, 2008). Happiness economics has the potential to change economics substantially in the future, both with respect to analysis of economic problems and the policy recommendations intended to solve them. Our argument rests on three pillars: measurement, new insights, and policy consequences.
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