Happiness Economics

“There is nothing good or bad; thinking makes it so.”  - William Shakespeare

I have always wondered on the difference between ‘my world’, ‘your world’ and ‘THE world’. This has prompted me to think on growth, development and success from various viewpoints.  I have also wondered on the excessive importance placed by our policy makers and the media on the economic indicators like GDP. While I understand that ‘money’, ‘wealth’, ‘richness’ and ‘finance’ are all greatly important at micro and macro levels, I have felt that we often exaggerate the importance of these terms in our personal and public lives. There is a great importance for non-financial variables also in our lives and society. This thought has prompted me to use my dissertation in my quest to find the meaning and aim to which we perform all our businesses in life. Many a times, we call this ‘feeling’ that we would like to attain, or the level of ‘satisfaction’ that we aim in our activities as “HAPPINESS”. Hence, I had combined my interest in economics and my thoughts on aim and meanings of life’s activities to name my subject area of dissertation in my master's course, to be broadly called ‘HAPPINESS ECONOMICS’.

Thus, I came to see studies on happiness for the last few decades. Studies before 1970s were mainly from psychology and other related social sciences. Economists became more interested in it after Easterlin’s study (Does Economic Growth Improve the Human Lot? Some Empirical Evidence; 1974). Bruno S. Frey, AloisStutzer, David G Blanchflower , Andrew J Oswald, Richard Layard, Daniel Kahneman etc. have made contributions to this field.

If we argue that the fundamental philosophy behind economics is the pursuit of human happiness, then we should study it directly ( Layard, 2005) and, although we cannot define happiness (after all, happiness means different things to different people), we can nevertheless ask people whether they feel happy or not ( Frey and Stutzer, 2002).

My study later narrowed down to happiness in a particular sub sample, ie. University students in Chennai.

This semester was devoted to a pilot study in this research. A questionnaire containing 30 questions, each question corresponding to a particular factor affecting happiness, was send across all students of Madras School of Economics (MSE), Chennai.

A Likert-type choice format was employed to measure the students' level of satisfaction. This scale has been widely used in prior research on wellbeing/satisfaction (Bradburn, 1969; Easterlin, 1974; Di Tella, MacCulloch and Oswald 2001).

Earlier studies:

In a study by David G Blanchflower , Andrew J Oswald (1997), it would seem that happiness among young people rose between the 1970s and 1990s (the time period covered by the data). One explanation that they offered for this increase was education. Their data show that Europeans with higher education (staying on school after 18) and under age 30 benefited the most from the subsequent ‘growth of happiness’.

Similar studies have been conducted elsewhere. “Happiness In University Education” by Grace Chan, Paul W. Miller and MoonJoong Tcha (International Review of Economics Education, volume 4, issue 1 (2005), pp. 20-45), “What Makes University Students Happy?” by Esa Mangeloja and Tatu Hirvonen are some examples. Many famous university rankings like the QS World University Rankings have started considering “student satisfaction” as one of the many factors affecting the rank of a university. Interestingly, in such an inter-university comparison, universities like Harvard and MIT which ranks high in student satisfaction also ranks high in overall rankings. Universities like the London School of Economics and Political Science, which are among reputed universities and which has a high overall rank, has less student satisfaction than other top universities like MIT and Oxford and thereby comes below these universities in overall rankings (As per QS World University Rankings,2011). It can be noted that such studies are helpful for both the student community, who are many a times confused on the selection of the university and for the University management, who could work on improving the student satisfaction.

So a study on happiness in educational institutions and participants in educational institutions hold significance. This satisfaction could be linked to a range of factors, including grades achieved, friendships developed, school facilities, opportunities to participate in extracurricular activities, and lecture quality. A systematic study on this front has not occurred in India.

What did all these happiness researchers discover?

Much of the research confirms things we’ve always suspected. For example healthy people are happier than sick people. Rich people are happier than poor people. And so on.

Sometimes, there have been some surprises. For example, while all these things do make people happier, it’s astonishing how little any one of them matters. A new house will make you happier, but not much and not for long. As it turns out, people are not very good at predicting what will make them happy and how long that happiness will last. They expect positive events to make them much happier than those events actually do, and they expect negative events to make them unhappier than they actually do. In both field and lab studies, it has been found that winning or losing an election, getting or not getting a promotion, passing or failing an exam—all have less impact on happiness than people think they will.

A recent study showed that very few experiences affect us for more than three months. When good things happen, we celebrate for a while and then sober up. When bad things happen, we weep and whine for a while and then pick ourselves up and get on with it.

Potential Use of the Study:

First, university policy-makers may be able to use the results to identify the major determinants of student satisfaction, and thus be well positioned to develop a learning environment that will enhance students' university experience. For example, if there is a positive and significant relationship between participating in extracurricular activities and student satisfaction, school administrations could explicitly encourage or even expect student participation in such activities. Second, the research has the potential to provide new evidence on a range of topical issues concerning university life, including the roles of students' allowances, job income and grade achievements in influencing satisfaction. Third, the results obtained may allow students to organize themselves in order to attain their idea of the "good life".

Happiness Studies in News:

·        According to the Washington Post, a group of experts including Daniel Kahneman, a psychologist who won the Nobel Prize in economics, met in December,2011 to draw up measures of “subjective well-being”. The group is financed by the American administration, and if its measures are deemed reliable they could become official statistics. If so, America would become the latest country to clamber aboard a happiness bandwagon. The French government started publishing its own happiness indicator in 2009. Britain's Office for National Statistics has a programme for measuring national well-being, and the Organisation for Economic Co-operation and Development is drawing up guidelines so its members (mostly the industrialised rich countries) can produce “well-being data”.

·        World Happiness Report was published. Commissioned for a United Nations Conference on Happiness, under the auspices of the UN General Assembly, it bears the imprimatur of Columbia University's Earth Institute and is edited by the institute's director, Jeffrey Sachs, and two happiness experts, Richard Layard of the London School of Economics and John Helliwell of the University of British Columbia. The report finds that the world's happiest countries world are in northern Europe (Denmark, Norway, Finland, Netherlands) and the most miserable are in Africa (Togo, Benin, Central African Republic, and Sierra Leone).

They argue that happiness can be measured objectively; that it differs systematically across societies and over time; that happiness has predictable causes and is correlated to specific things (such as wealth, income distribution, health and political institutions); and that therefore it should be possible for the government to create the right conditions for happiness to flourish. The authors want governments to use happiness as a guide to public policy, rather as they use gross national product (GNP) now. But given governments' (and economists') recent record in managing GNP, it is not clear whether it really would be such a good idea for the government to decide it knows better than individuals do what constitutes their happiness and how they can best pursue it.

Plans Ahead

The analysis of the questionnaire and its comparison with similar studies has to be done. I plan to use an Ordered Probit Model for such an analysis.

Earlier studies have come up with conclusions like, students who had sufficient social relations were the happiest, students doing part time jobs are happier etc. These results have to be analysed with my data. The reasons for such an agreement/disagreement in result also have to be evaluated.