Happiness economics facts for kids
The economics of happiness is a field of study that looks at how happy people are and what makes them feel good about their lives. It's not just about how much money people have. This field connects economics with other subjects like psychology (how people think and feel) and sociology (how people live in groups).
Instead of just focusing on money or profit, happiness economics tries to understand and increase things like:
- How people feel day-to-day (positive and negative emotions).
- Their overall sense of well-being.
- How satisfied they are with their lives.
This field has grown a lot, especially since the late 1900s. Researchers have developed ways to measure happiness and quality of life. For example, the country of Bhutan even put "Gross National Happiness" into its constitution in 2008 to guide its government's decisions.
Contents
Measuring Happiness
It can be tricky to measure happiness because it's a personal feeling. What makes one person happy might not make another happy. It's also hard to compare happiness across different cultures.
However, many experts in happiness economics believe they can compare happiness by looking at large groups of people over time and in different countries. They find similar patterns in what makes people happy.
Happiness is usually measured in two ways:
- Subjective measures: These are often surveys where people report how happy they feel.
- Objective measures: These look at things like how long people live, how much money they earn, or how much education they have. The idea is that these things usually lead to happiness.
Some scientists even think happiness can be measured by looking at brain activity with special imaging tools. But this brings up questions about whether brain scans are more reliable than what people say they feel.
What Affects Happiness?
Money and Happiness
For a long time, people thought that the richer a country was, the happier its people would be. Measures like gross domestic product (GDP) and gross national product (GNP) were used to show how successful a country was.
There is a link between a country's wealth and its people's happiness. People in richer countries tend to be happier than those in poorer ones. However, some studies suggest that once a country's average wealth reaches a certain point (around $15,000 per person), more money doesn't make people much happier. This idea is called the Easterlin paradox.
Your Own Income
Historically, economists thought that more money always meant more well-being. But research shows that once you have enough money for your basic needs, getting even more money doesn't make you much happier.
In 2010, researchers Daniel Kahneman and Angus Deaton found something interesting:
- People with higher incomes generally felt more satisfied with their lives overall.
- But their daily emotional well-being (how much joy, sadness, or anger they felt each day) only increased up to a certain income level, which was about $75,000 per year. After that, more money didn't make their daily lives feel much better.
This means that while money can buy some happiness, especially in terms of life satisfaction, it doesn't necessarily make every single day feel more joyful after a certain point.
Other things can make people happier than just money:
- A short course of psychological therapy can be much more effective at increasing happiness than simply earning more money.
Researchers have also given advice on how to spend money to increase happiness:
- Spend money on experiences (like a trip or a concert) instead of just things.
- Donate money to others or charities.
- Spend small amounts of money on many small, temporary pleasures.
- Don't buy expensive "extended warranties" or overpriced insurance.
- Try to "pay now, consume later" instead of "consume now, pay later."
- Think about the daily effects of a purchase before you buy it.
- Buy things that will truly help your well-being, not just the "best deal."
- Ask others who have experience with a product before buying it.
Some studies even suggest that people might choose to live in cities where they earn more money, even if it means they are less happy there. This shows that people sometimes trade happiness for other things, like a higher salary.
Social Support
Some studies suggest that money from social security payments or lottery winnings might not make people happier. This could be because happiness is often a reward for doing something useful or earning something yourself.
However, other researchers argue that a strong social support system (like welfare programs) can improve people's lives. It helps meet basic needs and gives people more control over their lives. This can lead to higher life satisfaction for everyone, rich or poor.
Work and Jobs
Generally, people who have jobs are happier than those who are unemployed. Having a job provides income, but it also offers other benefits that increase happiness, like:
- A sense of autonomy (being in control of your work).
- A feeling of mastery (being good at what you do).
These feelings are stronger predictors of happiness than just the amount of money earned.
If people work more or less than they prefer, their happiness can decrease. Working more hours than preferred (being "over-employed") seems to be worse for long-term happiness than working less (being "under-employed").
Unemployment can also affect a person's spouse. If one partner is unemployed, the other partner's happiness can go down. But being in a relationship can help reduce the negative impact of unemployment on an individual's happiness.
Becoming self-employed can increase happiness, especially if people choose it and have employees. However, the effects of retirement on happiness can vary. If someone retires voluntarily, their happiness might stay the same. But if they are forced to retire, their happiness might decrease.
Relationships and Family
In the 1970s, women generally reported being happier than men. But by 2009, this difference had disappeared.
In wealthy societies, where more money doesn't always mean more happiness, personal relationships become very important for happiness. Strong relationships with friends and family are key.
Some studies suggest that parents might report less happiness because they sacrifice their personal well-being for their children. This shows that people are willing to make trade-offs for things they value, like having a family.
Freedom and Control
There's a strong link between feeling in control of your own life and your happiness levels.
A study from the University of Zurich suggested that democracy (where citizens have a say in government) and federalism (where power is shared between different levels of government) make people happier. This is because:
- Citizens can keep a better eye on politicians, leading to more satisfaction with how the government works.
- Being able to get involved in politics and have control over the process makes people feel better.
However, too many choices can sometimes lead to anxiety and unhappiness. This is called the "paradox of choice." When you have too many options, it can be hard to decide, and you might expect too much from your choices.
Leisure Activities
How we spend our free time (leisure) also affects happiness. Research shows that leisure activities can make us happier by:
- Helping us relax and recover from work.
- Giving us autonomy (control over our time).
- Allowing us to master new skills.
- Helping us find meaning in our lives.
- Connecting us with others (socializing).
Activities that are physical, social, and done outdoors are often linked to greater satisfaction. Spending time strengthening social relationships and working on personal development during leisure time also makes people happier. Activities like shopping, reading, attending cultural events, listening to music, and going to sporting events are linked to higher happiness. However, spending a lot of time on the internet or watching TV is not linked to higher happiness compared to these other activities.
Different cultures might measure happiness and leisure differently. For example, in some Asian countries, "quality of life" might be a better measure than just "subjective well-being."
Both regular and occasional sports activities can increase happiness. Serious involvement in activities like taekwondo can lead to personal growth and happiness. Even irregular sports like skiing can make people happy, partly because of a feeling of "flow" (being completely absorbed in the activity).
Going on vacation can make our lives seem better, but it doesn't always make us happier in the long term. The effects of vacations on happiness are mixed, but some evidence points to higher happiness levels after a holiday.
Economic Security
Helping people escape poverty is linked to happier populations. When prices are very unstable or rise quickly (high inflation), it's bad for people's well-being, especially for those who lean politically to the right. This suggests that how people feel about economic security can affect their overall happiness.
Political Stability
Research shows that how satisfied people are with their lives explains a big part of why they vote for the current government. Economic growth also plays a role, even more than employment or inflation.
Economic Freedom
Countries where people have more individual freedom tend to have happier populations. Economic freedom can lead to more wealth differences, but it doesn't necessarily decrease overall happiness. In fact, some studies suggest that income inequality can even increase global well-being.
There's a debate about whether living near richer or poorer neighbors makes you happier. Some believe that living among rich neighbors can make you feel less happy about your own wealth (the "keeping up with the Joneses" effect). However, in the United States, the evidence suggests that living in richer neighborhoods actually makes people happier, likely due to better amenities, safer areas, and well-maintained housing.
Democracy
Having the right to participate in politics, like voting or having a say in government decisions, is strongly linked to happiness. This is because:
- It allows citizens to monitor politicians better, leading to more satisfaction with government.
- Being able to get involved and have control over the political process makes people feel good.
However, some non-democratic countries, like China and Saudi Arabia, have citizens who report being very happy with their government's direction. This suggests that voting preferences don't always directly translate into overall happiness with the government.
Economic Development
Historically, economists thought that economic growth didn't affect the happiness of a country's population. This was part of the Easterlin paradox. But more recent research shows that there is a link between a country's economic development and its people's well-being.
Building new infrastructure (like roads) can affect economic growth, but it varies a lot. So, a big project won't always make people happier.
How Happiness Affects the Economy
While most happiness economics looks at what makes people happy, some studies look at the opposite: how happiness affects the economy. Happiness can actually influence economic outcomes:
- Happy people tend to be more productive at work.
- Happiness can predict a person's future income.
- It affects how well people do in the job market.
There's a growing idea that "happy workers are productive workers." Studies have shown that happiness can have a positive effect on how productive someone is. Happiness can also influence how people vote. People's happiness often affects their political decisions, including whether they support the current government, even beyond their personal economic situation.
Related Studies and Measures
The Satisfaction with Life Index tries to show the average self-reported happiness in different countries. This is an example of a new trend to use direct measures of happiness, like surveys, instead of just traditional measures like GDP.
Other measures combine happiness with other factors:
- Happy Life Years: Combines self-reported happiness with how long people are expected to live.
- Happy Planet Index: Combines happiness with life expectancy and a country's ecological footprint (how much of the Earth's resources it uses).
Gross National Happiness (GNH) is a concept started by the King of Bhutan in 1972 as an alternative to GDP. Bhutan uses this index to guide its policies, for example, by limiting deforestation and requiring tourists to spend a certain amount of money to ensure high-quality tourism.
Other countries are also developing their own happiness indexes:
- Thailand started its own GNH index in 2006.
- Australia, China, France, and the United Kingdom are also creating indexes to measure national happiness. The UK started measuring national well-being in 2012.
- Canada released the Canadian Index of Wellbeing (CIW) in 2011, which looks at things like living standards, health, environment, communities, education, time use, democracy, and access to culture.
- The constitutions of Ecuador and Bolivia include the indigenous concept of "good life" (buen vivir or sumak kawsay) as a goal for sustainable development.
Old vs. New Economics
In the past, classical economics and neoclassical economics focused on increasing people's happiness, but they mainly used mathematical models and focused on things like wealth.
Happiness economics is different because it started measuring subjective happiness (what people say they feel) and life satisfaction through surveys across different countries and over time. This is a big change from just looking at objective measures like wealth or security.
Images for kids
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The Satisfaction with Life Index. Blue through red represent most to least happy respectively; grey areas have no reliable data available.
