Abstract
This article reviews research on the relationship between happiness (subjective wellbeing) and economic behaviour. I describe how experimental and non-experimental methods have been used, across the social sciences, to investigate how happiness drives, and is driven by, particular behavioural tendencies. I consider interpersonal behaviour (selfishness, trust and reciprocity) and individual behaviour (risk and time preferences). Regarding interpersonal behaviour, a general conclusion is that happiness results from pro-social behaviour. Happiness negatively correlates with selfishness and positively correlates with trust; in both cases there is stronger evidence that the behaviour is a cause of happiness than a consequence of it. Individuals also gain happiness from inflicting costly punishment on those who have harmed them, although being happy reduces the degree to which people are willing to dole out such punishment in the first place. Regarding individual behaviour, the relationship between happiness and risk preferences remains unclear despite a large body of research on the topic, while there is evidence that happiness affects time preferences by reducing impatience. In all cases, I draw distinctions between the long- and short- term relationships between happiness and behaviour.
Highlights
There is much in common between behavioural economics, the field applying psychological insight into human behaviour to explain the economic decisions people make, and happiness economics, the study within economics of happiness and its relationships with other factors
Short-term unhappiness leads to greater negative reciprocity
There is some evidence of a bi-causal positive relationship between short-term happiness and the use of positive reciprocity; evidence, suggests a negative relationship between long-term happiness and positive reciprocity
Summary
There is much in common between behavioural economics, the field applying psychological insight into human behaviour to explain the economic decisions people make, and happiness economics, the study within economics of happiness and its relationships with other factors. A large strand of the literature takes data from social surveys to measure associations between happiness and self-reported behavioural traits, such as selfishness or trust. Experiments can discern whether the increase (or decrease) in happiness is greater for individuals who choose to act one way or another Interpreting this as a causal effect of the behaviour on happiness is potentially problematic, . One approach some experiments have taken is to compare the behaviour of clinically depressed (and longterm unhappy) subjects with that of healthy control participants These studies infer causal effects of depression on particular behaviours on the basis of an implicit and perhaps questionable assumption that depression is an exogenous variable, and not something which may be influenced by the behaviours in question. Throughout this paper, clear distinctions are drawn between the two
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