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Published on: March 19, 2014
Explaining happiness
1Department of Economics, University of Southern California, Los Angeles, CA 90089-0253, USA. easterl@usc.edu
Summary
Social survey data challenge the happiness setpoint model, showing lasting impacts from life events. Increased income doesn't guarantee lasting happiness due to adaptation and social comparison, suggesting a need for better-informed preferences.
Area of Science:
- Psychology
- Behavioral Economics
- Sociology
Background:
- The setpoint model suggests genetics and personality determine happiness.
- Revealed preference theory in economics implies more income leads to greater happiness.
Purpose of the Study:
- To investigate the determinants of happiness using social survey data.
- To challenge existing models of happiness, specifically the setpoint model and economic inferences.
- To propose a revised theory of happiness accounting for adaptation and social comparison.
Main Methods:
- Analysis of social survey data on happiness.
- Examination of the effects of life events (nonpecuniary) and income (pecuniary) on well-being.
- Evaluation of hedonic adaptation and social comparison theories in relation to utility.
Main Results:
- Life events in the nonpecuniary domain have lasting effects on happiness, contradicting the setpoint model.
- Increased income does not lead to sustained happiness increases due to hedonic adaptation and social comparison.
- Adaptation and social comparison effects are less pronounced in the nonpecuniary domain compared to the pecuniary domain.
Conclusions:
- Individuals often misjudge the impact of adaptation and social comparison on utility in the pecuniary domain.
- An overemphasis on pecuniary goals at the expense of nonpecuniary aspects (family, health) reduces overall happiness.
- Policies promoting better-informed preferences are needed to enhance individual and societal well-being.
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