Happiness is non a construct you would automatically tie in with economic sciences, but it is a subject that is going more widely discussed and researched ; therefore we get ‘happiness economic sciences ‘ . Wikipedia 2009 defines this as the survey of a state ‘s quality of life by uniting economic experts ‘ and psychologists techniques. ‘ The Easterlin Paradox is a cardinal portion of felicity economic sciences. Easterlin looked into whether people with a high income were happier than those that had a low income within the same state and at a given point in clip. In add-on he besides evaluated the inquiry, ‘Does an addition in income over clip increase your felicity? ‘ Income is merely one of several chief determiners of felicity I will look into. I go on to look at growing, employment, administration and ownership and how these affect the well being of the person.
Its all good and good merely discoursing the thoughts associated with felicity and the economic system but you need grounds to endorse it up your theories. How do you mensurate happiness? In conventional economic sciences the closest construct would be ‘utility ‘ . Microeconomicss ( 2009 ) describes this as the satisfaction gained from devouring a peculiar good or package of goods. But this ca n’t really be given an exact numerical value ; we can merely state which good/bundle we prefer to the following. This is the job with mensurating felicity. We ca n’t put an exact value on it ; we can merely state how happy we are e.g. really happy, somewhat happy etc. The significance of these phrases might so differ greatly between different people, so any figures can merely be accurate to a certain point. In Easterlin ‘s work1974 he uses the informations from two different economic experts ‘ findings: ‘Gallup-Poll type study in which a direct inquiry of the undermentioned kind was asked: In general, how happy would you state that you are – really happy, reasonably happy or non really happy ‘ . ( Easterlin 1974 p3 ) The other was Cantril ( 1965 ) , Easterlin quote ‘s Cantril depicting the inquiries he asked the people he interviews. The sum-up of this quotation mark is that Cantril asked people to set down their hopes and wants for the hereafter and so their frights and concerns, eventually he asks them to rank where they think they are presently. ( Easterlin 1974 p4 ) . Despite the subjective nature of the information it has been found that different methods have seemed to demo similar tendencies. Happiness Literature Review by Frey and Stutzer ( 2001 ) quotes a figure of different beginnings demoing this. One being: ‘Factor analyses of ego and non-self studies of wellbeing have revealed a individual unitary concept underlying the steps proposing their cogency ( Ed Sandvik, Diener and Larry Seidlitz 1988 ) ‘ ( Frey and Stutzer p7 ) .
Income at first appears to be the cardinal determiner of felicity. Most surveies show that those that have a extremely income at happier than those with a lower income, within a given state. This could be explained in that the more money you have, the more you can buy what you want e.g. material goods. Therefore you would hold higher public-service corporation in comparing to the lower income earners ( Frey and Stutzer p10 ) . I have taken a tabular array of informations from Easterlin ‘s paper to exemplify this: the Gallup-Poll method is used.
( Does Economic Growth Improve the Human Lot? Some Empirical Evidence: Richard Easterlin 1974 p12 )
The tabular array shows six income groups runing from the lowest income to the highest. We can clearly see that the point where the reply for ‘very happy ‘ is greatest is where income is $ 15,000+ ; the lowest is at under $ 3000. In the lower income degrees, the bulk answered ‘fairly happy ‘ : it ‘s merely when you get to $ 7,000- $ 10,000 that ‘very happy ‘ is the bulk reply. This would look to presume that income and felicity show a positive correlativity. However this alterations when it is looked at over clip, as shown by informations from Frey and Stutzer ‘s paper ( p46 ) .
( Happiness Literature Review: Frey and Stutzer, 2001, p 46 )
Initially this appears to demo us similar consequences to the tabular array above: as income additions in a given clip period so does average felicity. Comparing consequences from two different clip periods we can see that average income has increased ; in Decile 10 average equality income has increased from $ 46338 to $ 61836, but that the average felicity evaluation has really decreased in the 2nd period 1994 – 96. This is illustrated graphical:
( Happiness Literature Review: Frey and Stutzer, 2001, p 47 )
The graph clearly depicts what the tabular array was demoing numerically ; that even though income has increased over clip, mean felicity has really fallen. This could merely be the instance for the United States, with it being an exclusion to the regulation ; nevertheless I have found that it is besides true for other states, e.g. Great Britain.
( Happiness Trends in 24 states: Inglehart, Welzel and Foa, 1946-2006 )
An thought that Frey and Stutzer ( 2001 ) discussed was the thought of higher income really being comparative to those around. Peoples compare themselves to the person ‘s around them. By making this they can derive satisfaction i.e. public-service corporation. If everyone ‘s income has increased by 1 % as a state, so the certain person is n’t traveling to experience better off in relation to his neighbor, whose income has besides increased by 1 % . This is all portion of aspiration degree theory: ‘Concepts of mutualist penchants due to comparings with relevant others ‘ ( Frey and Stutzer 2001 p12 ) .
This leads to the thought of decreasing fringy public-service corporation. There is a point where you have consumed so much that your public-service corporation gained from devouring another unit of the good is really less than the public-service corporation gained from the unit before. Tim Jackson explains this absolutely: ‘When you ‘ve had no nutrient for months and the crop has failed once more, any nutrient at all is a approval. When the American manner fridge-freezer is already stuffed with overpowering pick, even a small excess might be considered a load, peculiarly if you ‘re tempted to eat it. ‘ ( Tim Jackson, 2009 p9 ) . So we find that felicity does n’t needfully increase with increasing income. This is associated with Brickman and Campbell ‘s thought of a ‘Hedonic Treadmill ‘ . The thought is that, like on a treadmill, you are running but non traveling frontward and it can be rather an attempt to stay in the same topographic point. ‘As people make more money, outlooks and desires rise in tandem, which consequences in no lasting addition in felicity. ‘ ( Wikepedia2009 )
We ‘ve looked at the state of affairs for one state, Easterlin goes on to do international comparings. He found that when you looked at income and felicity on a planetary graduated table a positive association is n’t peculiarly clear. ( Easterlin, 1974, p16 )
( Prosperity without Growth: Tim Jackson, 2009, p36 )
This graph shows us that ‘after an income of degree about $ 15, 000 per capita, the life-satisfaction mark hardly responds at all even to quite big additions in GDP ‘ ( Tim Jackson 2009, p35 ) . Easterlin in 1974 said virtually the same thing: that every bit long as the income degree one had was sufficient to cover basic demands, mean felicity did n’t vary much. We can see that a important figure of states have a higher degree of life satisfaction than the USA, yet the USA has the highest income. There must be over cardinal determiners of felicity other than income, which we will now come on to.
Another principal determiner would be economic growing, whether that is positive or negative. Economic growing is when a state ‘s GDP increases. At first glimpse you would state that this must be positive. Higher GDP means that the state as a whole is richer. This may non needfully be such a large factor for developed states, but would be for developing states. It could potentially intend increased trade, so more goods produced, which could in bend create employment. For the more development states, a rise in GDP could intend that there was increased consumer pick. But so this may intend that outlooks become higher and so comparatively greater felicity is n’t available, mentioning back to the ‘Hedonic Treadmill ‘ . In fact Blanchflower and Oswald ( 2002 ) , have informations back uping an statement from Easterlin ( 1974 ) that economic growing does non take to an addition in felicity over all. Blanchflower and Oswald go on to advert possible factors such as inequality and unemployment.
The chase of economic growing has led to uneconomic growing, inequality and unemployment being merely two of the consequences. Uneconomical growing is when economic growing causes the quality of life of those affected to fall. Global heating, depletion of natural resources, urbanization and rising prices are merely a few other negative results of a rise in GDP.
Frey and Stutzer ( 2001 ) discourse unemployment and felicity to a great length. They found that those people that are unemployed give a lower degree of felicity than those that are employed. It has been suggested that: ‘happy individuals are fitter for working life, which makes it less likely that they will lose their occupation. ‘ ( Frey and Stutzer 2001 p22 ) However it was found that the chief cause is unemployment so taking to the single being unhappy. There are a figure of grounds that this could be the instance, a few being: that the person ‘s occupation is their life ; they could go down ; societal tenseness ; it could merely be the fright of losing their occupation that is doing the individual unhappy. This last factor could take to a national graduated table autumn in felicity degrees. In an economic recession unemployment is created. Everyone is so worried that their company could be the following to cut employees, making a general ambiance of uncertainness. If those involved have households and mortgages there is the add-on concern of the inability to finance these costs.
Inequality is a cardinal portion of uneconomic growing when we are looking at felicity. A rise in GDP causes the divide in income distribution to turn. The rich become richer and the hapless become poorer. Sing as felicity is a comparative impression, whereby others compare themselves to their contempories, the hapless ‘s sadness would increase ; as they are comparing themselves to the rich who have gained even more. Simon Kuznets discusses the relationship between economic growing and income inequality in his paper in 1955.
The diagram shows a Kuznets curve. Kuznets ‘s theory was that ‘inequality should needfully increase during the early phases of development ( due to urbanization and industralisation ) and lessening subsequently on as industries would pull a big fraction from the rural labor force. ‘ ( Philippe Aghion and Jeffrey G. Williamson 1998, p9 ) Inequality decreasing could besides be because income is get downing to dribble down into the low groups. After a certain degree of income per capita is reached inequality is perchance non such an issue. Much like felicity with increasing income degrees ; after a certain degree felicity does n’t look to be that greatly affected. Another thought is that a richer economic system could supply better instruction, so lower income persons have the potency to acquire better occupations. This is traveling to greatly increase self satisfaction and felicity. Kuznets theory is a really controversial one, but it helps us see that similar income degrees, after a certain point economic growing or its negative side effects potentially does n’t affect degrees of felicity so greatly.
Governance is another cardinal component in the felicity of persons. If you are really hapless you have a high fringy public-service corporation of income, but at a certain degree you start to believe about other costs. As people become richer, so they may get down paying attending to the consequence of uneconomic growing, such as the environmental costs. This is something they may turn to the authorities to turn to. Frey and Stutzer ( 2001 ) discourse how felicity might be affected by administration. Peoples are more likely to be happy in a democracy, because the politicians are taking to delight the populace in order to remain in power. As a consequence the populace are more likely to hold their desires met or at least looked into. I ‘ve taken the diagram below from Frey and Stutzer ( 2001 ) . It shows freedom against felicity for 38 chiefly developed states.
( Happiness literature reappraisal: Frey and Stutzer 2001, p50 )
When mentioning to freedom it is intending political, economic and personal freedom. ‘Political freedom measures the possibility of citizens to prosecute in the democratic procedure. Economic freedom measures the chance for persons to prosecute in the free exchange of goods, services and labor. Personal freedom measures how free one is in one ‘s private life. ‘ ( Frey and Stutzer 2001, p27 ) You can see from the graph that there is a strong positive correlativity between the freedom and felicity.
The King of Bhutan has been one of the major participants in conveying the felicity of his people forward through administration. In 2006 he said that ‘fulfilling the vision of GNH will be one of the four chief duties of his reign in this Royal Address. ‘ ( Gross National Happiness, 2008 ) GNH stands for gross national felicity. The King felt that ‘GDP needed to be channeled towards felicity ‘ . ‘He believed that felicity is an index of good development and good society. ‘ ( Gross National Happiness, 2008 ) The Gross National Happiness web site Tells you about how GNH indexs were chosen. It explains that an index has to hold a negative of positive consequence on well-being e.g. offense, safety, schoolroom experience. This shows that authoritiess are get downing to take a major function in the felicity of their people.
The subjects I have discussed above, I feel are the chief determiners of felicity, but so there are others that subdivision of off them. Property is one of these. If you have your ain place you are likely to hold an increased sense of stableness and comfort. However if you have a mortgage or pay rent, you have the added force per unit area of holding to do these payments. This could go a job if you face unemployment. The degree of felicity you get from holding a belongings might be related to what your neighbor ‘s place looks like. If you live in a cottage and your neighbour lives in a modern, townhouse you may want their belongings of yours, doing you to be unhappy.
( Prosperity without Growth: Tim Jackson, 2009, p33 )
Property could be linked to the construct of ownership. The proprietors gain pleasance from holding ownership of a nice topographic point to populate or a nice auto etc. This satisfaction would increase if other people desired what they already have. This desire to owe material objects causes the job that the ‘Hedonic Treadmill ‘ associates with. This is that the more we have the more we want and it becomes harder to fulfill our wants, therefore felicity does n’t needfully lift when we consume them. Equity could be explained much the same as ownership. It is to make with your fundss and your ability to hold some disposable income if you sold something you ain e.g. your house. It ‘s the difference between the value the market topographic points on your house and the mortgage payments that are against it. Your equity can be negative though which would n’t be a good thing for your province of felicity.
If we look at goods consumed and produced as a determiner of felicity, we find that it is really subjective. It is all about the gustatory sensations of the single purchasing. You might state that person purchasing a cocoa saloon is happier than person purchasing a fruit bite. But we do n’t cognize the public-service corporation each person additions from their good. The goods being produced will demo what consumers are demanding. It might be that consumers are demanding these goods, but find that they ca n’t really devour them because the monetary value is excessively high. This would do a loss in felicity. There is n’t any grounds to turn out that people devouring one good are better off and happier than those devouring another.
As people society becomes richer over clip a figure of the determiners become less of import. Once people become richer and make a certain income degree, income becomes less of a factor in their degree of felicity. Now that income is n’t a worry people turn to other determiners, such as the effects of economic growing. They start to look into issues such as pollution and bend to their authorities in order to help the state of affairs. A cardinal illustration of this is the economic growing of China. China ‘s economic system has grown quickly over clip and is going one of the major world powers. Now that it has reached a certain degree people are get downing to respond to the effects of their growing: chiefly the sum of C emanations from production. So over clip when society is richer people are looking less to deduce felicity from income and looking more administration and how they can do the universe a better topographic point to populate in. Persons might besides get down to look in ownership and equity as a manner of increasing felicity. They can obtain felicity from bring forthing something they have desired. Unemployment is a major characteristic in altering the degree of people ‘s wellbeing. If society is going richer over clip, people might experience more secure and non hold the concern of losing their occupation and therefore their topographic point in society.
I have found from researching this inquiry that income is a chief determiner of felicity. However that is merely true to a certain income degree, after which it appears to hold small consequence. I think administration and economic growing are the other cardinal determiners, more so as society becomes richer over clip. When income degrees have been satisfied, over clip people turn to the authorities to turn to issues that they are n’t happy with in the economic system. They look to happen solutions to the negative effects of growing in order to increase their well being. The other factors become more of import when people are seeking to happen ways to increase their felicity. The one thing that is certain is that felicity is comparative. Your felicity depends on the societal ‘norm ‘ : what those around you have and want.
- Aghion, P. , Williams, JG. , 1998, Growth, inequality, and globalisation: theory, history and policy, printed in UK, publishing house Cambridge university imperativeness
- Blanchflower, DG. , Oswald, AJ. , Revised June 2002, Well-Being Over Time in Britain and the USA
- Easterlin, R.,1974 ‘Does Economic Growth Improve the Human Lot? Some Empirical Evidence ‘ . University of Pennsylvania
- available from hypertext transfer protocol: //graphics8.nytimes.com/images/2008/04/16/business/Easterlin1974.pdf ( assessed on 2nd, 5th, 6th December 2009 )
- Frey BS and Stutzer A, 2001, Happiness Literature Review, Working Paper Series
- ISSN 1424-0459, Working Paper No. 80 revised version
- Gross National Happiness, The Centre for Bhutan Studies, 2008, Explanation of GNH Index,
- Available from hypertext transfer protocol: //www.grossnationalhappiness.com/gnhIndex/intruductionGNH.aspx ( assessed on 5th December 2009 )
- Inglehart R. , Foa R. , Peterson C. , Welzel C. , 2009, Development, Freedom and Rising Happiness, Volume 3 portion 4
- zavailable from hypertext transfer protocol: //margaux.grandvinum.se/SebTest/wvs/SebTest/wvs/articles/folder_published/publication_578/files/pps.pdf ( assessed on 5th, 6th December 2009 )
- Inglehart R. , Foa R. , Peterson C. , Welzel C, no day of the month, Happiness trends in 24 states 1946-2006, Internet appendix to Inglehart, Foa and Welzel, “ Social Change, Freedom and Rising Happiness, ” Journal of Personality and Social Psychology
- Available from hypertext transfer protocol: //www.worldvaluessurvey.org ( assessed on 5th December 2009 )
- Jackson, T. , 2009, Prosperity without growing, Published by Sustainable Development Commission
- Kuznets, S. , 1955, Economic Growth and Income Inequality, The American Economic Review, Vol. 45, No. 1
- Available from hypertext transfer protocol: //courses.nus.edu.sg/course/ecshua/eca5374/Economics % 20growth % 20and % 20income % 20inequality_Kuznets_AER55.pdf ( assessed on 5th December 2009 )
- Kuznets curve diagram available from hypertext transfer protocol: //filipspagnoli.files.wordpress.com/2008/10/kuznets_curve-income-per-capita-and-inequality.png
- Morgan, W. , Katz, M. , Rosen, H. , 2009, Microeconomics 2nd European Edition, publishing house McGraw-Hill Higher Education
- Wikipedia ‘Happiness Economics ‘ , page was last modified on 2 December 2009 at 22:19, available from ‘http: //en.wikipedia.org/wiki/Happiness_economics ‘ ( assessed on 5th December 2009 )
- Wikipedia, Hedonic Treadmill, page was last modified on 10 November 2009 at 19:09 available from hypertext transfer protocol: //en.wikipedia.org/wiki/Hedonic_treadmill ( assessed on 6th December 2009 )