Happiness Economics: Can We Have an Economy of Well-Being?

Carol Graham

At this year’s American Economics Association annual meetings in Denver, there were the usual panels on topics ranging from the international exchange-rate regime to the roots of the global financial crisis to trends in the real-estate market in the United States. More unusual was a keynote session on whether happiness measures should replace gross national product. The latter was a standing-room-only event that was written up (rather sceptically) by the Wall Street Journal. As if that were not enough, in the same month there was a panel on the same topic at the World Economic Forum in Davos, Switzerland, with Jeffrey Sachs, the once wunderkind of free markets, calling for happiness as the ninth Millennium Development Goal. That session was written up (less sceptically) by The New York Times.

What is the world coming to? I participated in both of those panels. And other than kicking myself for being at two top skiing destinations in the same month without getting to ski, I was very happy about it. Until five or so years ago, I was one of a very small number of economists studying happiness; now my small circle of happiness researchers has been joined by other economists who are using happiness surveys to understand questions as diverse as the effects of commuting time on wellbeing, why cigarette taxes make smokers happier, and why the unemployed are less unhappy when there are more unemployed people around them.

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