An Economist's Thoughts on Happiness

Yale’s business school just published an interesting interview with Betsey Stevenson-my favorite economist. And yes, the usual disclosure applies: this is partly because she’s an interesting coauthor and colleague, but also because she’s my partner. She makes an interesting point about the interplay between happiness research and behavioral economics:

For a very long time, we believed the best thing to do was just look at what people do and infer their preferences from their behavior. But we’ve started to learn that there are some domains where that is hard to do… I think one of the richest potential areas for happiness data is in the area of behavioral economics – in situations where the way people behave may not actually reflect their true, underlying preferences.

But she also warns economists not to get too carried away:

There is a real question of whether happiness is the same thing as utility. Gary Becker has argued quite forcefully that they are not the same thing, that they should not be used interchangeably, that instead we should think of happiness as being one component of utility. I agree with his point that there is probably more to life than even life satisfaction. I know that sounds almost oxymoronic, but perhaps we’re missing a sense of greater purpose or fulfillment.

The interview is interesting throughout, providing a provocative account of the state of knowledge on economics and happiness. Read the full interview, here.

Midge McBride

I thoroughly enjoyed your book, "Superfreakonomics". what a breath of fresh air for a "crazy" like me. (I'm not alone!)Re --page 8 & 9--- In Vancouver, B.C.,when I was a kid, the milkman and breadman came in horse-drawn carts leaving the manure on our paved street but my Dad saw thee opportunity and to the dismay of my "proper" English Mom scooped it up ---dug it into our garden and produced the best vegetables in the block. (Besides feeding 13 kids) Re-Page 177-- Hooray for the Intellectual Ventures! Wonderful! Re- page 186 "Dark leaves absorb more incoming sunlight than ---" So when there was all that talk about the melting arctic ice I sent an e-mail to CBC News Network suggesting that all the WHITE styrofoam packing that protects most of the things we buy and that my recycling company won't accept should be dropped into the DARK arctic ocean to float around and reflect the heat of the sun! I heard their laughter all the way across Canad. I also suggested that rather than waiting till a child or soldier or ?? steps on a landmine the place (Princess Di walked across a field) should be bombed with ice chunks! Okay---stones! Okay a machine gun! Maybe they didn't like me asking if this would put the makers of prosthetic limbs or the funeral homes out of business.!!! ---page 204 As a retired nurse I certainly have to agree with the report "To Err is Human" and the fact that doctors don't wash their hands often enough and not that well. Nurses are also at fault to a lesser degree but at we were often tested using red dye before hand washing with a "light" inspection showing up our good or bad technique. A reminder that sometime ego gets in the way of an innocent patient's health or life! So "To Err is Human" is a poor excuse! Just call me courageous but doctors hand washing should be tested and their handwriting tested to qualify to write out orders!!! Just call me crazy ----get in line!!! Can't wait for your next book!



It's interesting that Betsey implicitly equates "life satisfaction" with "happiness" in her second statement quoted here. I'm not sure I agree with that equivalence.

In my classes when covering altruism and economics, I've always been careful to describe utility as satisfaction, distinct from happiness. I can be satisfied with something that doesn't necessarily make me happy. (Ex. The price of gas, passing grades, and a quick lunch, all can generate satisfaction without necessarily creating happiness or unhappiness.)


She made the claim that there is more to utility than just happiness.
Then, ignoring her own lesson, she assummed life satisfaction=happiness and substituted the word happiness for life satisfaction. Then stated "There is more to life than just life satisfaction."

But, since happiness is not equal to utility, she should have said "There is more to life than just happiness."


I agree with Betsy Stevenson and Gary Becker that although sometimes we make choices or take actions, that might not reflect on our preferences or tastes. Economists must take in account when collecting behavioral economics data that many times in life people may choose a good or service, that may not maximize their utility but they choose according to their willingness and ableness, because you cannot always get what you want as they say. Nevertheless, Becker argues that happiness is not utility, it is merely a component of it. Perhaps this is why many people who are satisfied with their life, are not totally happy, this might bring into question if there is a balance between utility and the choices we make.


Isn't utility one component of happiness, not the other way around?

Robyn G

I just had a conversation with a woman who is a sales person at a local store that I frequent. We have had many interesting conversations over the years. So- I told her a bit about what I was up to and she then began describing herself as unfulfilled in what she does. I said that I was a sales person for years at multiple ny stores. so don't knock it. She then proceeded to tell me that she sells jewelry on the side and will tell me more about her sideline of work that seems to be giving her a sense of greater meaning and self importance next time we visit. So Jeffrey- I think that you have a good point. People need a sense of purpose, but one that makes them feel useful. She has a Shitzu like my two.. Showed me pictures- treats the dog like her child. No children and unmarried. Perhaps then utility on many fronts.

Robyn G

I must add, the woman is well off. Made good money in her 20's she tells me and clearly is doing ok now. The day job keeps her busy and is a source of some income. So money does not seem to be her trouble. No immediate family and some form of yearning to be acknowledged and for real sense of self-worth may well be. Her sibling ignores her. But she admits to having good friends.


How do you determine what someone's underlying preference is? I don't think you can simply ask someone what their preference is because they have incentives to tell you what they think they should want, not what they really want (compare the person people say they want to date with the people they actually do).

I can't think of a better way to find out what makes someone happy or at least satisfied than what they actually choose to do. Perhaps True Happiness is unavailable to them because their choices are limited, but if you try to find what someone wants that is unavailable you might as well ask them if they want a unicorn.


"For a very long time, we believed the best thing to do was just look at what people do and infer their preferences from their behavior."

I find it pretty silly that anyone, at least any mature adult, would ever think that. It seems to me that almost the very definition of being a responsible adult means doing things that you clearly would prefer not to do. Things like filing your tax return, taking out the trash, attending a funeral, working an extra job so you can afford music lessons for you kid, etc are typically done out of a sense of responsibility, not "preference". It's just that some people are afforded more opportunity to follow their preferences (probably either through sheer luck or as a result of exhibiting the aforementioned responsibility)


I feel like a lot of what she says runs contrary to what I've heard from other researchers. I would really love for some references since she seems to be citing a bunch of research. I understand that's not the object of the article, but it would be nice.


I guess this means economists have a hard time knowing what they are talking about.


I don't think people want to be happy. What they want is to be satisfied. We misunderstand this by such bromides, as "we hold these truths to be self-evident........ life, liberty, and the pursuit of happiness." Better to have acknowledged "life, liberty, and the pursuit of satisfaction."

Happiness is no more useful to a person than anger, humiliation, or sadness. Wasn't there research recently that surmised that happiness makes us stupid, and anger makes us smart? Please reference it , if you are familiar.

So, I take all the happiness research to be irrelevant.


Dear Andrew and Jz;

The best research I know on the subject of happiness was done by Sigmund Freud. It is in Civilization and its Discontents. As far as your insight that people don't want to be happy, I think that you may have a point. I think that people have to come to terms with who they are and what they want and struggle to overcome whatever is in their way.

Major Slack, deputy undersecretary

I think the metrics are a big problem. Some people (and you know who) are never happier than when complaining.

lakshman Dalpadado

If our ancestors were 'happy 'we would be still living in caves!
Happy people are the most unproductive people I know: they are too happy to care.

Long live unhappy people. Steve Jobs - you are my hero!

Eric M. Jones

Meditate. If that doesn't do it, meditate more.

(ps Love #1 Midge McBride)

Christopher Strom

It appears that economists have gotten ahead of themselves in trying to describe behavior and offer prescriptions without a thorough understanding of what motivates people (happiness, life satisfaction, wealth, etc).

It seems that the field could benefit from concepts that manufacturing and engineering have been built upon:

* You can only control systems to the extent that you understand them.

* You can only understand systems to the extent that you can measure their inputs and outputs.

* You can only measure inputs and outputs to the extent that you can define them.


The problem with gauging happiness is that most people have no idea what happiness is, exactly. A Disney vacation? A Ferrari in the Garage? Having all the conveniences of a modern existence at your fingertips? I strongly advise anyone that wants to use happiness as an indicator for a research equation to first study the engaging works of, Mihaly Csikszentmihalyi and Martin Seligman. Happiness is not anything close to what most of us think it is.

Don Mac Brown

Dissatisfaction is the main motivation for seeking satisfaction.


"It seems to me that almost the very definition of being a responsible adult means doing things that you clearly would prefer not to do. Things like filing your tax return, taking out the trash, attending a funeral..."

You would prefer not to do them *absent any consequences*, but clearly adults take consequences into consideration. Considering the whole situation, obviously you would prefer to take out the trash rather than not, because the alternative is letting your house fill up with trash, or maybe paying someone else to do it for you. You are definitely acting out of your preference for what will give you the greatest utility, satisfaction, or whatever words you want to use. The same with all the other examples.