Maximising happiness does not maximise welfare

Edward Glaeser, Joshua Gottlieb, Oren Ziv 15 October 2014

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Recent interest in the psychology and economics of happiness has had pronounced influence on public policy. The high-profile report by Stiglitz et al. (2009) epitomises a push for policies to explicitly promote increases in survey measures of wellbeing as a major social objective. Places ranging from the country of Bhutan to the city of Somerville, Massachusetts explicitly measure happiness, or subjective wellbeing, and strive for improvements over time in such measures.

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Topics:  Frontiers of economic research

Tags:  happiness, welfare, cities, Rust Belt, US

Employee satisfaction and firm value: A global perspective

Alex Edmans 25 July 2014

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Is employee satisfaction good or bad for firm value? While it may seem natural that companies should do better if their workers are happier, this relationship is far from obvious. The 20th-century way of managing workers (e.g. Taylor 1911) is to view them as any other input – just as managers shouldn’t overpay for or underutilise raw materials, they shouldn’t do so with workers. High worker satisfaction may be a sign that workers are overpaid or underworked. However, the world is different nowadays.

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Topics:  Labour markets Microeconomic regulation Productivity and Innovation

Tags:  employment, Labour Markets, productivity, Management, happiness, Stock returns, labour-market flexibility, employment protection, work, employee satisfaction, worker satisfaction, profits, labour-market regulation

Using happiness scales to inform policy: Strong words of caution

Timothy N. Bond, Kevin Lang 04 July 2014

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Economists have long known that GDP is an imperfect measure of well-being. In addition to missing nonmarket transactions, it ignores environmental degradation, the quality of social interactions, and many other outcomes of economic interest. But at least since Easterlin (1974) some economists have gone further, and challenged the view that per capita GDP and well-being are positively related.

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Topics:  Frontiers of economic research

Tags:  happiness, wellbeing, GDP measurement

Why GDP just doesn’t add up

Diane Coyle interviewed by Viv Davies,

Date Published

Mon, 06/09/2014

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Topics

Frontiers of economic research
Tags
happiness, GDP measurement, hedonic price index

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Measuring economic progress A new measure of US GDP
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What good are children?

Angus Deaton, Arthur Stone 04 March 2014

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It is a commonplace that new parents are overwhelmed by a “tsunami of love” when they first meet their dependent offspring. Older children, though often a source of irritation and worry, are also a source of joy, and there are few parents who can even bear to think of a world without their children. Yet, study after study has shown that those who live with children are less satisfied with their lives than those who do not; Hansen (2012) and Stanca (2012) are recent surveys. How can this be?

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Topics:  Frontiers of economic research

Tags:  happiness, children, life satisfaction

Measuring economic progress

Diane Coyle 17 February 2014

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The debate about how best to measure economic activity dates back to well before the ‘invention’ of GDP by Richard Stone and others during the Second World War (Stone 1947). The earliest attempt was William Petty’s 1665 estimate of income and expenditure in England and Wales, followed by a variety of other approaches in the 18th and 19th centuries. By the 1930s, partly in response to the demand from policymakers for a better handle on what was happening in the economy, the current approach to national income was taking shape (Coyle 2014).

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Topics:  Frontiers of economic research

Tags:  happiness, GDP measurement, hedonic price index

GDP and life satisfaction: New evidence

Eugenio Proto, Aldo Rustichini 11 January 2014

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A commission on the measurement of economic performance and social progress was created on the French government’s initiative. Since 2008, this distinguished group of social scientists has put subjective well-being into the limelight as a possible supplement to traditional measures of development such as GDP (Stiglitz et al. 2009). The British government has also shown considerable interest in developing a subjective well-being measure in recent years as an instrument for policy.

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Topics:  Development Frontiers of economic research

Tags:  development, growth, happiness, Easterlin paradox, subjective well-being, national income

Happiness and voting

Federica Liberini, Eugenio Proto, Michela Redoano 15 November 2013

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The idea that states should support and protect citizens’ wellbeing goes back at least two hundred and fifty years – as stated in the 1776 US Declaration of Independence.1

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Topics:  Frontiers of economic research Politics and economics

Tags:  happiness, voting, subjective wellbeing

The midlife crisis in humans and other apes

Andrew J Oswald 05 December 2012

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Happiness is approximately U-shaped across a person’s life. It has been known for more than two decades by behavioural scientists and wellbeing researchers that human happiness and mental health appear to follow a large, looping, U-shaped trajectory through the main part of people’s lives (cf. Feddersen, Metcalfe, and Wooden 2012). This statistical pattern has been found in dozens of countries.

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Topics:  Frontiers of economic research

Tags:  happiness, natural sciences, mid-life

The costs of Hurricane Sandy: Life satisfaction as an alternative to GDP

John Feddersen, Robert Metcalfe, Mark Wooden 02 November 2012

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Early forecasts suggest that Hurricane Sandy won’t influence US GDP much, positively or negatively. For example, IHS Global Insight estimates a reduction of 0.5% in the final quarter of 2012, while Capital Economics believes the rebuilding effort may actually increase GDP.

This should be good news, but for the fact that GDP, when considered in isolation, is a misleading measure of the total cost of a natural disaster. Others share this view. For example, life satisfaction expert Justin Wolfers recently tweeted:

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Topics:  Environment Frontiers of economic research

Tags:  catastrophes, happiness, wellbeing, Hurricane Sandy

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