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

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 7: If Happiness is so Important, Why Do We Know So Little About It?

Marina Bianchi


Marina Bianchi 1. Introduction The title of this chapter: ‘If happiness is so important, why do we know so little about it?’ requires some clarification. First of all, does it really indicate a paradox? In the economic theory of choice it is the maximization of own satisfaction, utility, or pleasure, that individuals pursue in their actions. Even in its modern axiomatic form and stripped of any characteristic that is not formal, subjects are still assumed to maximize a ‘utility’ function. But does this imply that we, as economists, should know much if anything about it? The answer that economists give is clear: ‘No’. One reason is simple, and is based on the principle of consumer sovereignty. Individuals are the only real ‘experts’ as to their own actions and desires. What they decide to choose is what they know is best for them. Preferences can simply be inferred from choices with no plunge necessary into their possible nature, genesis or configuration. The assumption, then, that choices are preferences eliminates any element of paradox from the fact that such a fundamental dimension of economic choice as individual desires and motivations is so little studied and understood. Yet this assumption is conditional on a second, more hidden one: that there is no tension or mismatch between choice and the maximization of preferences. Should conflict in any form exist, then choices would cease systematically to reveal individual preferences. In this case an analysis of preferences, how they form, what triggers...

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