ETPM
Economics & happiness
Pavel Štika
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Eco & happiness - ETPM
Contents
►
Introduction to economics & happiness
►
Happiness in the history of economic thought
►
Social relations as reciprocity
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Eco & happiness - ETPM
Introduction to economics & happiness
Subjective well-being (SWB)
"All things considered, how satisfied are you with
your life as a whole these days?"
Psychologists: SWB is stable both in time and space
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Eco & happiness - ETPM
Introduction to economics & happiness
Easterlin paradox
Easterlin (1974):
► Within a country positive correlation of income
and SWB
► International comparison – relation of GDP and
SWB up to USD 20.000 per capita
► There is no correlation in time !!!
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Eco & happiness - ETPM
Introduction to economics & happiness
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Eco & happiness - ETPM
Introduction to economics & happiness
Reaction of economics
- For 25 years happiness paradox ignored
Kahneman (2000):
► Hedonic treadmill
► Aspiration treadmill
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Eco & happiness - ETPM
Introduction to economics & happiness
Recently boom of literature on eco & happiness
e.g.
Easterlin (2005): people disregard treadmill effects,
thus allocate too much time to work and too little
to family and health
Layard (2006): heavy taxation would make people
behave rationally
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Eco & happiness - ETPM
►
Introduction to economics & happiness
►
Happiness in the history of economic thought
►
Social relations as reciprocity
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Eco & happiness - ETPM
Happiness in the history of economic
thought
Aristotle
► Happiness as eudaimonia – flourishing human life
How to reach it:
► Selfless practice of virtues of friendship and love
► Activity for the benefit of the community
Paradox of happiness – one’s own happiness
reached via pursuit of other’s happiness
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Eco & happiness - ETPM
Happiness in the history of economic
thought
Italian school of civil happiness:
Anthonio Genovesi
► Political economy as science of public happiness
Fully aware of the invisible hand
► To make it working however civic society needed
► Functional civic society reached by practicing
civic virtues – friendship and mutual assistance –
which generate trust
►
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Eco & happiness - ETPM
Happiness in the history of economic
thought
Adam Smith
► Fully aware of relationality of men
► Happiness as correspondence of sentiments
!! Missing nexus between happiness and welfare
Focus on welfare generation and distribution
► Market generates enough trust to work properly
► Trust as reputation, key driver - self interest
►
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Eco & happiness - ETPM
Happiness in the history of economic
thought
Many classics of economic thought have strong
concern for happines
eg
Alfred Marshall
► Goal of economics – extinction of poverty
► Extreme poverty hinder people to reach
happiness through family and religional life
► Promotes reduction of working hours – small
material harm, great moral benefit
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Eco & happiness - ETPM
Happiness in the history of economic
thought
Beginning of the end of relationality in economics
Jeremy Bentham introduces utilitarianism
► Happiness reduced to one dimension – pleasure
► Loss of relational dimension of human interaction
- no more Aristotelian happiness paradoxes
► Methodological individualism – subject of analysis
man-object relationship
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Eco & happiness - ETPM
Happiness in the history of economic
thought
Simplicity of Bentham’s approach inspires many
Hedonic marginalism
► Jevons, who introduces economics as an utility
science
► Edgeworth introduces indifference analysis
Inspiration in psychology, utility is kardinal, social
relations also produce utility,
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Eco & happiness - ETPM
Happiness in the history of economic
thought
The very end of social relations in economics
comes with ordinalism
Pareto:
► Economics as a science of rational choices
► Choices which do not follow self-interest are not
rational – subject for sociology
► Well behaving preferences derived indirectly, by
observation of choices
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Eco & happiness - ETPM
►
Introduction to economics & happiness
►
Happiness in the history of economic thought
►
Social relations as reciprocity
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Eco & happiness - ETPM
Social relations as reciprocity
Empirics: Social relations key source of happiness
Easterlin (2005) – social relations miss aspiration
treadmill
Kahneman (2000) – most intensive affective feeling
generated by social interactions
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Social relations as reciprocity
Zamagni (2005): two ways how to access human
reltaions
► Exchange of equivalents
here economics knows a lot
►
Gift principle
economics stuck in the onthological individualism
can not explain altruism
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Eco & happiness - ETPM
Social relations as reciprocity
Current explanations of altruism
► Egocentric approach (Becker)
►
Egoistic approach (Axelrod)
►
Alter-centric approach (Frank, Etziony etc)
All fail because treat altruism as man-object relation
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Eco & happiness - ETPM
Social relations as reciprocity
Zamagni (2005)
► Gift as a beginning of social relation as reciprocity
Reciprocity (Kolm 1994) - Series of bi-directional
transfers, which are
► Voluntary
► Bi-directional
► Transitive
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Eco & happiness - ETPM
Social relations as reciprocity
Paradox of happiness is not paradox anymore –
credibly selfless action towards others promotes
reciprocity, which builds strong relations, which
produce happiness.
Reciprocity also generates trust – which is a key
resource of economic development
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Thank you
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Eco & happiness - ETPM