What is Happiness?
For millennia, philosophers, moralists, and scholars have postulated and waxed poetic about happiness, its causes, and its true meaning. Achieving happiness is the ultimate goal for many, as evidenced by the thousands of best-selling self-help books, the hundreds of sold out self-improvement seminars across the world, and the dozens of millionaire life coaches. Only recently, however, have the advancement of technology and the increase in interdisciplinary studies begun to yield concrete insights on how to be happy. At the intersection of behavioural economics and neuropsychology lies the emerging field of happiness economics that examines “the relationship between individual satisfaction and economic issues such as employment and wealth.”
There are three standard methods of measuring well-being. The first is the economic approach, which uses utility and GDP as proxies for happiness on an individual and national level, respectively. The concept of utility is fundamental to economics, and in fact, most basic economic models are centered around a rational, selfish agent who acts to maximise his own utility. But if individuals instead act to maximise their happiness, and happiness and utility differ, economic models would be fundamentally flawed, or at least incomplete. According to Tom Lane, a researcher at the University of Nottingham, while “utility entered economic analysis as a close synonym of happiness,” the two concepts have since diverged. Gary Becker, the winner of the 1992 Nobel Memorial Prize in Economic Sciences, posited that happiness is, in fact, a single component of utility. GDP, too, has been highly and widely criticized as a representation of well-being, as its simple formula fails to capture the big picture, ignoring measures such as income distribution, price levels, and life-satisfaction.
It was, in fact, this criticism of GDP as a measure of well-being that lead to the creation of indices such as the Human Development Index, or HDI, that form the basis of the sociological method. The HDI attempts to summarise a country’s achievement in health, measured by life expectancy at birth, education, measured by expected years of schooling for children of school entering age, and standard of living, measured by gross national income per capita. However, even the United Nations, the creator of the HDI, admits that, “a fuller picture of a country’s level of human development requires analysis of other indicators and information.” While a good measure of a country’s overall socioeconomic position, the HDI cannot be substituted for a measure of happiness.
While utility functions, GDP, and the HDI all have fundamental roles in neoclassical economics, to yield profound and meaningful insights, happiness economics should focus on direct measures of happiness. This suggests the adoption of the psychological approach: directly asking individuals how happy they are. The very concept of happiness necessitates that a happy individual self-identifies as a happy individual, and there are several advantages associated with using self-assessment as the measure of happiness. First, it is easy to understand: a simple rating on a scale from 1 to 10 concisely gives an idea of how happy an individual is. Second, it is democratic, in the sense that each individual is in direct control over the assessment of their happiness. Third, it is a single measure. While combining indices such as HDI, GDP, the unemployment rate, and the opportunities for social mobility in a country can paint a picture of how happy individuals are likely to be, a simple rating gives one, sole number that can represent the combination of all these factors. While some argue that different individuals may be using different criteria to assess their own happiness, this is actually a strength of the self-assessment method: each individual assesses what is important to them, how their reality reflects their dreams, and how happy they feel based on what matters to them. Furthermore, the happiness levels reported by self-assessment are reliable: they remain consistent over time for the same individual, line-up with the estimates of an individual’s happiness as judged by third-party observers, correlate with objective indicators such as overall health, antidepressant use, physical stress, brain activity, employment, and education, and can predict future behaviour such as suicide or divorce.
So, what is it that really determines happiness?