Happiness Economics: A Brief on the Validity of Subjective Well-Being Metrics

Abstract

In the last decade, there has been considerable criticism of the general reliance on GDP as a proxy indicator of progress and development. One strand of criticism focuses on The Easterlin Paradox and the inability of GDP to capture the subjective well-being (the scientific term for Happiness) of a nation. Richard Easterlin argues that his paradox underlies (mis-)judgments in this particular nature of welfare. New opportunities to empirically explore preconditions and covariates of well-being that go beyond the traditional GDP metrics have spurred impressive and stimulating new research and the Economics of Happiness has emerged as one of the most thriving subjects of the discipline. This briefing paper re-assesses the Easterlin Paradox using recent data on an array of countries to draw out lessons for public policymaking. The brief is intended to provide a concise summary of research knowledge on Happiness Economics in an accessible form to a varied audience including academics, policymakers, civil-societies and students.