happiness, economics of

Abstract

The economics of happiness assesses welfare by combining economists’ and psychologists’ techniques, and relies on more expansive notions of utility than does conventional economics. The research highlights factors other than income that affect well-being. It is well suited to informing questions in areas where revealed preferences provide limited information – for example, the welfare effects of inequality and of inflation and unemployment. Despite the potential contributions for policy, a note of caution is necessary because of the potential biases in survey data and the difficulties in controlling for unobservable personality traits.