Over the last couple of decades, economics has branched off into many different directions. Instead of being concentrated solely on the financial economy, the field of economics now includes such branches as behavioral economics, environmental economics, game theory economics and even happiness economics. Economists that specialize in happiness economics dedicate their time and research to understanding human happiness in individuals and societies using the tools of economics.
A few findings in the field of happiness economics seem particularly valid, relevant to the daily life of East Valley residents and interesting enough to merit publishing. These include the work of Richard Easterlin, Andrew Oswald and Arthur Brooks.
Richard Easterlin was one of the first economists to start looking at human happiness as a serious topic in economics. Easterlin’s research showed, as you might expect, that in any given country wealthy people reported being happier than poor people. This is not a big surprise. What was a surprise to many economists at the time was that Easterlin also found that, after basic needs are met, people with increased prosperity don’t report being any happier on average than people without that prosperity. This finding was true between countries as well– that is, once basic needs are met, people in rich countries don’t report being happier than people in lower-income countries on average.
Easterlin’s seemingly contrary findings that wealth within a nation makes a person happy but wealth between nations does not is commonly called the Easterlin paradox. Easterlin suggested from his findings that individual happiness depends less on absolute wealth than wealth relative to those around you. The adjective ‘rich’ is itself a relative term, after all.
Many happiness economists also believe in human adaptability, or the idea that people get used to their circumstances, whatever they may be. This idea was expressed by the founder of modern economics, Adam Smith, in 1759: ‘The mind of every man, in a longer or shorter time, returns to its natural and usual state of tranquility. In prosperity, after a certain time, it falls back to that state; in adversity, after a certain time, it rises up to it.’
Federal Reserve Chairman Ben Bernanke once explained that Easterlin’s paradox teaches that people are happier if they “remain aware of the fortunate aspects of their lives, offsetting the natural human tendency to take those things for granted after a while.” It wouldn’t take long for even the poorest East Valley residents to create a long list of things they could be grateful for—from a warm climate to individual liberties to a host of other possibilities—and we’d be happier if we did. Happiness economics suggests that taking the time to list 100 things for which you are grateful or keeping a gratitude journal are worthwhile tools– accessible to everyone– for improving individual happiness.
A second major contributor to the work of happiness economics is Warwick University (England) economist Andrew J. Oswald. In a 1997 article published in the Economic Journal, Oswald lists seven conclusions on happiness:
1. Economic things matter only insofar as they make people happier.
2. Happiness is relative (the Easterlin paradox).
3. Happiness has been rising slightly in the USA and Europe since the early 1970s, but the rise is so small it seems extra income is not contributing dramatically to the quality of people’s lives (incomes have risen significantly since 1970).
4. Unemployed people are very unhappy.
5. Reported happiness is high amoung those who are married, on high income, women, whites, the well-educated, the self-employed, the retired and those looking after the home. Happiness is ‘u-shaped’ in age, minimizing around the 30s.
6. Consistent with the patterns in happiness data, suicidal behavior (or unhappiness) is more prevalent among men, the unemployed and those with marital problems. Rich countries have more suicides (because happiness is relative). High unemployment may swell the number of people taking their own lives.
7. In Britain and America the level of job satisfaction is not rising over time.
Oswald challenged the prevailing theory that GDP is the ultimate indicator of national well-being with his findings that high-income countries also have more extremely dissatisfied individuals and suicides. A few common denominators for happiness, since validated by additional research, include family relationships and employment. Mesa residents will find greater effectiveness in their exercise of the inalienable right to pursue happiness if family relationships and engrossing jobs, hobbies or activities are a significant part of that pursuit.
Finally, Dr. Arthur Brooks of Syracuse University has also made significant contributions to the field of happiness economics. Brooks claims, for example, that charitable giving makes people both happier and more prosperous. Brooks’ unique approach also teases out the finding that individual happiness makes a person more wealthy, not vice versa, largely due to declines in stress levels and increases in productivity. This conclusion may go against the conventional wisdom, which is unreliable anyway, but it is not a surprise to America’s most successful business managers, who have consistently found that happy customers and happy employees translates to greater profits.
These three contributors, Easterlin, Oswald and Brooks, are only three of an entire field of happiness economists in the United States and Europe. The cumulative works of this field of economics could hardly be summarized in a short article such as this, but these studies are worthy of the attention of policymakers. If the officials of Mesa City, Maricopa County and the State of Arizona are charged with safeguarding and improving the welfare of their citizens, which they are, contributions from happiness economists should be at the forefront of policy decisions. Continued and consisted support of job-friendly and family-friendly policies are among those well accepted by economists that should prevail in public discussion.