Happiness is typically measured using subjective measures - e.g. surveys - and/or objective measures. One concern has always been the accuracy and reliability of people’s responses to happiness surveys. Objective measures such as lifespan, income and education, are often used as well as or instead of subjectively reported happiness, though this assumes that they generally produce happiness, which while plausible may not necessarily be the case. The terms quality of life or well-being are often used to encompass these more objective measures.
Some scientists claim that happiness can be measured both subjectively and objectively by observing the joy center of the brain lit up with advanced imaging, although this raises philosophical issues, for example about whether this can be treated as more reliable than reported subjective happiness.
Micro-econometric happiness equations have the standard form: . In this equation is the reported well-being of individual at time , and is a vector of known variables, which include socio-demographic and socioeconomic characteristics.
However, a free market think tank Cato Institute points out that since life expectancy has continued to increase in nations wealthier than this, often partly attributed to economic growth, Happy Life Years have continued to increase.
Money correlates with happiness, but the rate diminishes with more money.Richard Easterlin, »Explaining Happiness, 2003 In 2010, Daniel Kahneman and Angus Deaton found that higher earners generally reported better life satisfaction, but people's day-to-day emotional well-being only rose with earnings until a threshold annual income of $75,000.
Gregg Easterbrook claims that even though wealth, or economic surplus, is more common today than in 1950, people are still as happy (or unhappy) as they were 60 years ago. In polls taken by the National Opinion Research Center, about 1/3 Americans said they were really happy in 1950, since then the polls have been taken periodically, and the results have stayed about the same since then. Wealth has not been making people happier. This is because after the basics for survival are taken care of, money cannot bring people any more happiness than they would experience without it.
Other factors have been suggested as making people happier than money.Rana Foroohar, »"Money v. Happiness: Nations Rethink Priorities", Newsweek, April 5, 2007]. A short term course of psychological therapy is 32 times more cost effective at increasing happiness than simply increasing income., »Money does not make you happy 'but therapy does', The Telegraph, November 20th 2009]Boyce, C. J., & Wood, A. M. (in press). »or mental health: The cost of alleviating psychological distress with monetary compensation versus psychological therapy »staff/alex.wood/money.pdf' Health Economics, Policy and Law One study, when corrected for social status, showed no correlation between income and happiness.
An alternative perspective focuses on the role of the welfare state as an institution that improves quality of life not only by increasing the extent to which basic human needs are met, but also by promoting greater control of one's life by limiting the degree to which individuals find themselves at the mercy of impersonal market forces that are indifferent to the fate of individuals. This is the argument suggested by the U.S. political scientist Benjamin Radcliff, who has presented a series of papers in peer reviewed scholarly journals demonstrating that a more generous welfare state contributes to higher levels of life satisfaction, and does so to rich and poor alike.Radcliff, Benjamin. 2001. "Politics, Markets, and Life Satisfaction," American Political Science Review, 95 (4): 939-952.Radcliff, Benjamin and Alexander Pacek. 2008. "Assessing the Welfare State: the Politics of Happiness," Perspectives on Politics. 6: 267-277.Alvarez-Diaz, A., Gonzalez, L., and Radcliff, B. 2010. "The Politics of Happiness: On the Political Determinants of Quality of Life in the American States", The Journal of Politics, 72 (3): 894-905.
Children tend to decrease parental happiness, at least until they leave home, although in terms of a broader life narrative the opposite may be true. Some research shows that at some ages (toddlers and teenagers) they decrease parental happiness, whereas at others they increase it, averaging out to no overall change. Married people are happier, but it is unclear if this is due to the marriage or if happy people are more likely to marry.
A study conducted at the University of Zurich suggested that democracy and federalism bring well-being to individuals.Bruno S. Frey & Alois Stutzer, »Happiness, Economy and Institutions, 4-5, 1999 It concluded that the more direct political participation possibilities available to citizens raises their subjective well-being.
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Given its very nature, reported happiness is subjective.Ruut Veenhoven, »World Database of Happiness, 2007 It is difficult to compare one person’s happiness with another.Carol Graham, »The Economics of Happiness, 3, 2005. It can be especially difficult to compare happiness across cultures. However, many happiness economists believe they have solved this comparison problem. Cross-sections of large data samples across nations and time demonstrate consistent patterns in the determinants of happiness.
Determinants
Maslow's hierarchy of needs
Abraham Maslow theorized that human happiness is the outcome of meeting a set of needs. He listed these in order of priority, leading to a pyramid called Maslow's hierarchy of needs. The set of needs includes physiological, safety, love/belonging, esteem, and self-actualization needs. These needs can be used as a basis for evaluating the overall happiness level of individuals.that is for a person to have happiness her or his needs have to be satified first (N Gurts).
GDP and GNP
Typically national financial measures, such as GDP and GNP, have been used as a measure of successful policy. Although on average richer nations tend to be happier than poorer nations, some studies have indicated that beyond an average GDP per capita of about $15,000 (most of the world's nations have less than this), the average income in a nation makes little difference to the average self-reported happiness.Bruno S. Frey and Alois Stutzer Happiness and Economics, Princeton University Press, December 2001; published in the UK by John Wiley & Sons.»In Pursuit of Happiness Research. Is It Reliable? What Does It Imply for Policy? The Cato Institute. April 11, 2007 Other economists have disputed the accuracy of these studies, finding a logarithmic correlation between GDP per capita and self-reported happiness.See Easterlin paradox for details.
Individual income
Historically, economists have said that well-being is a simple function of income. However, it has been found that once wealth reaches a subsistence level, its effectiveness as a generator of well-being is greatly diminished.»Explaining Economics This paradox has been referred to as the Easterlin paradox and may result from a "hedonic treadmill." This means that aspirations increase with income; after basic needs are met, relative rather than absolute income levels influence well-being. Happiness economists hope to change the way governments view well-being and how to most effectively govern and allocate resources given this paradox. However, other research suggests that no paradox exists, and happiness is linearly related to the logarithm of absolute (real, PPP-adjusted) income, with little or no relative income component .
Social security
Professor Ruut Veenhoven showed that social security payments do not seem to add to happiness. This may be due to the fact that non-self-earned income (e.g., from a lottery) does not add to happiness in general either. Happiness may be the minds reward to a useful action. However, Johan Norberg of CIS, a free enterprise economy think tank, presents a hypothesis that as people who think that they themselves control their lives are more happy, paternalist institutions may decrease happiness.»The Scientist's Pursuit of Happiness, Policy, Spring 2005.
Employment
Work is important to happiness. It creates a sense of purpose, beneficial relationships with co-workers, and also earns money. Losing one's job can be a great source of unhappiness.Andrew Oswald, »A Non-Technical Introduction to the Economics of Happiness, 1999
Relationships and children
Relationships, particularly those with women, are important to the happiness of both sexes.
Freedom and control
There is a significant correlation between feeling in control of one's own life and happiness levels.