Handbook on the Economics of Happiness
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Handbook on the Economics of Happiness

  • Elgar original reference

Edited by Luigino Bruni and Pier Luigi Porta

This book is a welcome consolidation and extension of the recent expanding debates on happiness and economics. Happiness and economics, as a new field for research, is now of pivotal interest particularly to welfare economists and psychologists. This Handbook provides an unprecedented forum for discussion of the economic issues relating to happiness. It reviews the more recent literature and offers the interested reader an insight into the vast scope of the field in terms of the theory, its applications and also experimental design. The Handbook also gives substantial indications as to the future direction of research in the field, with particular regard to policy applications and developing an economics of interpersonal relations which includes reciprocity and social interaction theory.
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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

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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...

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