Glaeser, Ε., Gottlieb, J. & Ziv, O. (2014) “Maximising happiness does not maximise welfare“, VoxEU Organisation, 15 October.
Governments are now measuring happiness, or subjective wellbeing, and some have begun trying to maximise it. This column discusses recent research showing that happiness is not the same thing as utility. The choices people make suggest that they have desires and objectives other than happiness. It is therefore possible to make people worse off while increasing their reported subjective wellbeing.
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.
We discuss the tensions surrounding the measurement of a personal or social welfare function using happiness data. Because resources are scarce, a push to improve happiness reallocates resources away from other desires or objectives. We discuss the theoretical problem with this effort. We then consider recent research about the distinction between happiness and utility. This evidence suggests that happiness is not equivalent to utility, so welfare economics does not justify happiness maximisation as a policy goal.
Relevant posts:
- De Neve, J. E. & Norton, M. (2014) “Busts hurt more than booms help: New lessons for growth policy from global wellbeing surveys“, VoxEU Organisation, 08 October.
- Binder, M. & Coad, A. (2014) “Heterogeneity in the Relationship between Unemployment and Subjective Well-Being, A Quantile Approach“, Explorations in Theory and Empirical Analysis, Working Paper No. 808, Levy Economics Institute, June.
- Pickett, K., Wilkinson, R. & de Vogli, R. (2014) “Equality, Sustainability and Wellbeing“, The EU’s Fifth Project: Transitional Governance in the Service of Sustainable Societies, The Francqui International Conference 2014, Brussels, Palais des Académies, 8-9 May.