Happiness Economics

AAA

DEFINITION of 'Happiness Economics'

The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth. Happiness economics attempts to use econometric analysis to discover what factors increase and decrease human well-being and quality of life. One major study of happiness economics has been conducted by the Europe-based Organization for Economic Cooperation and Development. The OECD ranked happiness in its 34 member countries, based on factors such as housing, income, jobs, education, environment, civic engagement and health. The study's purpose is to help governments design better public policies.

INVESTOPEDIA EXPLAINS 'Happiness Economics'

Happiness research has found that people in richer countries with good institutions tend to be happier than people in poorer countries with bad institutions. At a certain point, increases in annual income no longer bring greater happiness. This is estimated to fall somewhere between $75,000 and $120,000. Working more increases happiness up to the point where people feel overworked by consistently long hours, and unemployment almost always makes people very unhappy, as does poor health. Work commutes longer than about 20 minutes also make us unhappy, and so does high-interest consumer debt.

RELATED TERMS
  1. Rational Choice Theory

    An economic principle that assumes that individuals always make ...
  2. Cognitive Dissonance

    The unpleasant emotion that results from believing two contradictory ...
  3. Quality Of Life

    A highly subjective measure of happiness that is an important ...
  4. Rational Behavior

    A decision-making process that is based on making choices that ...
  5. Gross National Happiness - GNH

    An aggregate measure of a country's national production, in the ...
  6. Behavioral Economics

    The study of psychology as it relates to the economic decision ...
RELATED FAQS
  1. What are the different types of price discrimination and how are they used?

    Price discrimination is one of the competitive practices used by larger, established businesses in an attempt to profit from ... Read Full Answer >>
  2. What are the different sources of business risk?

    A certain risk level is inherent in running a business. A company cannot completely eliminate risk, but it can control or ... Read Full Answer >>
  3. How does the law of diminishing returns affect marginal revenue?

    The law of diminishing returns is better thought of as the law of increasing opportunity costs. The law states that -- if ... Read Full Answer >>
  4. What is the theory of asymmetric information in economics?

    The theory of asymmetric information was developed in the 1970s and 1980s as a plausible explanation for common phenomena ... Read Full Answer >>
  5. How do command economies control surplus production and unemployment rates?

    Historically, command economies don't have the luxury of surplus production; chronic shortages are the norm. They have also ... Read Full Answer >>
  6. How is marginal analysis used in making a managerial decision?

    Marginal analysis plays a crucial role in managerial economics, the study and application of economic concepts, to managerial ... Read Full Answer >>
Related Articles
  1. Professionals

    Is Your High-Profile Job Worth The Price?

    Certain careers can be prestigious and lucrative, but there are always costs. Find out if they're worth it.
  2. Retirement

    Find Happiness By Altering Life Benchmarks

    It's not fair to compare yourself to the Joneses. Find out how to alter your aspirations and still meet your goals.
  3. Retirement

    Money Can't Buy Retirement Bliss

    Emotional snags can ruin your future happiness. Learn how you can avoid them.
  4. Economics

    What Is Supply?

    Supply is the amount of goods a producer is willing to produce at a given price, and is one of the most basic concepts in economics.
  5. Economics

    What is a Management Buyout?

    A management buyout, or MBO, is a transaction where a company's management team purchases the assets and operations of the business they manage.
  6. Economics

    Modified Internal Rate of Return (MIRR)

    Modified internal rate of return (MIRR) is a variant of the more traditional internal rate of return calculation.
  7. Economics

    Explaining Cash On Delivery

    Cash on delivery, also referred to as COD, is a method of shipping goods to buyers who do not have credit terms with the seller.
  8. Economics

    Understanding Structural Unemployment

    Structural unemployment is an economic miss-match where workers fail to find jobs and employers with available jobs fail to find workers.
  9. Credit & Loans

    What's a Revolving Line of Credit?

    A revolving line of credit is an arrangement made between a company or an individual and a bank to borrow money on a short-term basis.
  10. Economics

    Understanding Horizontal Integration

    Horizontal integration is the acquisition or internal creation of related businesses to a company’s current business focus.

You May Also Like

Hot Definitions
  1. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  2. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  3. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  4. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  5. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
Trading Center