Exam #4
Friday, Dec. 14, 8-10 a.m.
Review sheet and PowerPoint lectures
from Monday and today are on the
website www.as.ysu.edu/~tsporter
Happiness Economics
Differs from mainstream approach:
• Assumes some measurement of
happiness is possible
• Based on survey data
• Survey data results consistent with
physiological data
Happiness and Income
Studies comparing the happiness of people
within a country have found:
• People with higher incomes report higher
levels of happiness but the relationship is weak
• Increases in income result in smaller and
smaller increases in happiness (losses reduce
happiness more than equally-sized gains)
“What Can Economists Learn from Happiness Research?” Bruno Frey and Alois Stutzer
Happiness and Income, cont.
• Marriage and friends have a larger impact
on happiness (US surveys suggest that the
effect of divorce on happiness is equivalent
to a loss of $100,000)
• Unemployment has a negative effect
larger than expected from the loss of
income (estimated impact of job loss:
$60,000 from US data)
Happiness Across Countries
Comparisons of happiness across countries
have found:
• There is a positive relationship between
income and happiness but it is weak
• Democracy and level of corruption have a
significant effect on happiness
• Inequality can negatively affect happiness,
especially if institutions are suspect
“What Can Economists Learn from Happiness Research?” Bruno Frey and Alois Stutzer
Easterlin Paradox
Increases in average income in countries
typically do not result in reported
happiness.
Happiness does not seem to change
much over the lifecycle in spite of
changes in income
Possible Explanations for the
Easterlin Paradox
• Thermostat hypothesis
• Relative vs. absolute income levels
• Aspiration theory
References:
Frey, Bruno S. and Alois Stutzer. 2002. “What
can Economists Learn from Happiness
Research?” Journal of Economic Literature.
60(June): 402-435.
Graham, Carol. “The Economics of
Happiness.” The Brookings Institute
http://www.brookings.edu/views/papers/graham/2005graham_dict.pdf
Wealth and Happiness
Listen Now: [3 min 30 sec]
Real MediaExplain these links
All Things Considered, January 4, 2002 · Does money buy happiness?
Economists discussed this question at a conference in Atlanta today. We hear
from some people at a Washington, D.C., automatic teller machine about their
thoughts on the subject. And we hear the comments of Richard A. Easterlin, an
economics professor at USC, who has studied the relationship between money
and happiness.
http://www.npr.org/templates/story/story.php?storyId=1135830
Money and Happiness
by Mike Pesca
Listen Now: [3 min 30 sec]
Real Media|Windows MediaExplain these links
Day to Day, August 27, 2003 · NPR's Mike Pesca talks to USC
economics professor Richard Easterlin about the economics of
happiness. Easterlin has published a study which finds money does not
always equal happiness.
http://www.npr.org/templates/story/story.php?storyId=1413687
Economist Calculates the Six-Figure Value of Love
by Renee Montagne and Steve Inskeep
Listen Now: [2 min 20 sec]
Real Media|Windows MediaExplain these links
Morning Edition, February 14, 2005 · You don't have to have a lot of money
to feel rich. Economist David Blanchflower calculates that being married is
the emotional equivalent of an extra $100,000 a year.
http://www.npr.org/templates/story/story.php?storyId=5532618