Here is the second installment of my self-important "series" on happiness and the environment (here is the first). This post provides some background into what economists think happiness is all about.
Economists like to use the word “utility.” It means, simply, happiness or satisfaction. The word utility is a holdover from the 18th century. As J.S. said in his recent critique, “utilitarianism is the foundation of modern economics.” And, the maximization of utility, er, happiness, is the assumed goal of decision makers. The typical utility function (despite its obvious problems, an equation helps to think about some economic problems) looks something like this:
U = f(X, Q)
U stands in for utility, obviously, and the letters inside the parentheses represent goods and services. X represents market goods, such as stereos and steaks. Environmental economists like to include Q, which stands for environmental quality. The utility function states that as stereos and environmental quality (and all other good things) increase, happiness increases. It takes more money to buy more things, so we think that as income increases happiness increases as well.
Happiness research uses survey questions on happiness, life satisfaction, etc. Now, I’m not one to criticize what might seem like silly survey questions, I’ve based a silly career on it, but some economists won’t hear of it. The problem is taht economists tend to think that utility can only be measured ordinally, not cardinally. That is, we think that people can tell you if they are happier today than yesterday but not that their happiness level is 8 today and 5 yesterday.
So, any method that ranks countries based on happiness scores should be questioned, a least a little. That said, there is a bunch of interesting happiness research going on in economics and the other social sciences. There is even a Happiness and Public Policy blog devoted to happiness research and related matters.
