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Chapter 3: Human Needs Hierarchy and Happiness: Evidence from the Late Pre-Classical and Classical Economics
Stravos Drakopoulos and Anastasios Karayiannis 1. Introduction In the last few years the concept of happiness has begun to interest economists seriously. The papers published in the Economic Journal in 1997, the special issue of the Journal of Economic Behaviour and Organization in 2001 and the 2003 Conference on the Paradoxes of Happiness in Economics are clear indications of the rising interest in the subject. However, this does not imply that there were no examples of older work of economists like Easterlin (1974) which had dealt with this issue. In the older and in the more recent literature one can discern a common empirical ﬁnding in many countries, that substantial increases in real per capita income do not correspond to equivalent increases of individual happiness. In fact, there are examples where a negative correlation between real income and happiness was observed (see, for instance, Easterlin 1974; Oswald 1997; Lane 2000; Wright 2000). These ﬁndings have puzzled many economists, some of whom have called the phenomenon the ‘paradox of happiness’ (for example, Bruni 2002). As one would expect there have been a number of explanations regarding this paradox. One is based on the ‘subjectivist’ approach to utility, whereby variables which are considered by many economists to be non-economic, play an important role in individual utility functions and thus in the level of happiness (Frey and Stutzer 2002). Such variables can be emotions, social stimuli, goal completion and meaning, freedom and social capital (see Scitovsky 1976; Elster 1998; Loewenstein 1999; Putnam 2000;...
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