Economics of Happiness

Happiness economics examines the relationship between human satisfaction on the one hand and economic problems on the other hand having a great impact on the choices and scarcity. It applies economic tools and techniques including econometric tools uncovering the determinants that change quality of life or completeness of life and human welfare. It is a comparatively new branch of economics in general and research in particular. Mainstream economics takes account of all those schools of economic thought that are labelled as orthodox.

Most economic models and theoretical underpinning pertaining to mainstream economics depend upon Lionel Robins notions concerning choices and scarce resources having alternative uses that are contingent upon the concepts involving economic scarcity. The main emphasis of mainstream economics has been in identifying the factors of happiness. Economics of happiness is not the matter of factors alone. It identifies the nature, causes and consequences of happiness at both micro and macro level. In contemporary times, development economists are always in search of an alternative model or approach examining the socio-economic consequences of happiness.

It is very important for an individual or economy to be happy so as to be healthy and wealthy. Happiness has a dual effect: on one hand, it creates healthy environment and on another hand, it improves out productive capacity or efficiency. It may act as a significant factor of economic goals or outcomes and increases the probability of one's future income gains.

Happiness both affects our nutrition and productivity levels which are very much complementary. The more we are happy the more we take good nutrients and work efficiently. Hence, it affects labour market performance. There is good number of theoretical and empirical literature supporting 'happy-efficient labour hypothesis'. There is a bi-way positive causal relationship between happiness and productivity. Happiness positively affects our productivity levels and inturn our productivity levels positively affects our level of happiness.

It is very important to remember that state has an important role in improving our levels of nutrition, productivity, and happiness. The happiness of an economy depends to a great extent upon the welfare functions of the state which have a great bearing upon the public decision making process. Even the notion of of utility and rationality depend not only upon our sentiments and past information but on our all relevant available information. The concept of utility, a want satisfying power of a commodity, has always influenced mainstream economics that has long relied on the concept of utility.

Since, utility is subjective varying from a person to person, happiness or sadness, innate or external is beyond what is seen and observed for the reason that it cannot be directly measured or observed by an external observer. Accordingly, economists by and large observe people's behavior to reveal what gives them satisfaction or utility.

The notion of Happiness is considered as a challenge to the practice and theoretical underpinning of the subject of economics in generic form and economics of happiness in precise form. Nonetheless, both academic and research world have come up with some happiness or proxy indexes to guide its political economy including economic and political governance. It is not easy to develop a happiness model or establishing happiness as a measure because people think it is only meant to serve political goalmouths.

There has always been a concern that happiness will promote power and authoritarian outcomes which is not always true. Therefore, happiness experts and development economists suggest that happiness studies and research should not be used in planning and public policy especially fiscal policy but rather used to inform individuals about their freedom, choices and capabilities.

Dr. Binish Qadri, Former, Assistant Professor, Cluster University , Srinagar
Co-Authors
Falak Imtiyaz, UG Honors Political science, 3rd Sem, Cluster University Srinagar
Asiya Rahim, Integrated Economics, 10th sem, Cluster University Srinagar
Uzma Qadir, Student, 3rd Sem, ug economics, Cluster University Srinagar