Drakopoulos, Stavros A. (2005): The paradox of Happiness: towards an alternative explanation. Forthcoming in: Journal of Happiness Studies (2008)
Download (100kB) | Preview
ABSTRACT There is a common empirical finding in many countries that substantial increases in real per capita income do not correspond to equivalent increases of individual happiness. These findings have puzzled many economists that some have called the “paradox of happiness”. There have been a number of explanations regarding this paradox. This paper attempts to tackle the paradox of happiness by employing the idea of hierarchical choice. The hierarchical approach implies that there are some basic human needs which must be satisfied before non-basic needs come into the picture. The paper argues that the hierarchical structure of needs implies that the satisfaction of basic needs provides substantial increases to individual happiness compared to the subsequent satisfaction of secondary needs. This might also be an alternative explanation of empirical findings showing a positive relationship between income and happiness up to certain level of income.
|Item Type:||MPRA Paper|
|Original Title:||The paradox of Happiness: towards an alternative explanation|
|Keywords:||Happiness human Needs|
|Subjects:||I - Health, Education, and Welfare > I3 - Welfare and Poverty > I31 - General Welfare|
|Depositing User:||Stavros A. Drakopoulos|
|Date Deposited:||24. Jan 2008 16:18|
|Last Modified:||12. Feb 2013 12:17|
Alesina, A.; Di Tella, R. and Mac Culloch, R. (2004) “Inequality and happiness”, Journal of Public Economics, 88, pp.2009-42. Andrews, F. (1991) “Stability and change in levels and structure of subjective well-being: USA 1972 and 1988”, Social Indicators Research, 25, pp.1-30. Ardrey, R. (1970) The Social Contract, New York: Dell Ash, C. (2000) “Social self-interest”, Annals of Public and Cooperative Economics, 72, pp. 261-84. Baltas, G. (2001) “Utility-consistent brand demand systems with endogenous category consumption: principles and marketing applications”, Decision Sciences, 32, pp. 399-421. Bjornskov, C. (2003) ‘The Happy few: Cross-Country evidence on social capital and life satisfaction”, Kyklos, 56, pp.3-16. Blanchflower, D. and Oswald, A. (2004) “Well-being over time in Britain and the US”, Journal of Public Economics, 88, pp.1359-86. Borch, K. (1968) The Economics of Uncertainty, Princeton: Princeton University Pres. Bruni, L. (2002) “A history of happiness in economics”, Paper presented to the European Society for the History of Economic Thought Conference, Crete. Bruni, L. (2004a) “The “technology of happiness” and the tradition of economic science”, Journal of the History of Economic Thought, 26, pp.19-44. Bruni, L. (2004b) “The ‘happiness transformation problem’ in the Cambridge tradition”, European Journal of the History of Economic Thought, 11, pp.431-51. Canova, L., Rattazzi, A. and Webley, P. (2005) “The hierarchical structure of saving motives”, Journal of Economic Psychology, 26, pp.21-37. Canterbery, R. (1979) “Inflation, necessities and distributive efficiency”, in J. Gapinski and C. Rockwoodn (eds) Essays in Post-Keynesian Inflation, Cambridge, Mass: Ballinger. Chipman, J. (1971) "On the Lexicographic Presentation of Preference Orderings", in Chipman et al Preferences, Utility and Demand, New York : Harcourt and Brace Jovanovich. Clark, A. and Oswald, A. (1996). “Satisfaction and Comparison Income”, Journal of Public Economics, 61, pp.359-381. Day, R. (1971) “Rational choice and economic behaviour”, Theory and Decision, 1, pp.229-251. Doyal, L and Gough, I. (1984) “A theory of human needs”, Critical Social Policy, 10, pp.6-38. Deci, E. and Ryan, R. (2000) ‘The ‘what ‘ and ‘why’ of goal pursuits: Human needs and the self-determination of behavior”, Psychological Inquiry, 11, pp.227-268. Drakopoulos, S. (1992) "Psychological Thresholds, Demand and Price Rigidity", Manchester School, LX, 152-68. Drakopoulos, S. (1994) “Hierarchical choice in economics”, Journal of Economic Surveys, 8, pp. 133-153. Drakopoulos, S. and Theodossiou, I. (1997). Job Satisfaction and Target Earnings, Journal of Economic Psychology, 18, pp.694-704. Drakopoulos, S. and Karayiannis, A. (2004) “The historical development of hierarchical behaviour in economic thought”, Journal of the History of Economic Thought, 26, pp.363-378 Duesenbery, J. (1949) Income, Saving, and the Theory of Consumer Behavior, Cambridge, Mass: Harvard University Press. Earl, P. (1986) Lifestyle Economics, Brighton: Wheatsheaf Books. Easterlin, R. (1974) “Does economic growth improve the human lot? Some empirical evidence” in Nations and Households in Economic Growth: Essays in Honor of Moses Abramovitz (ed. P. David and M. Reder). New York: Academic Press. Easterlin, R. (1995) “Will raising the incomes of all increase the happiness of all?”, Journal of Economic Behaviour and Organization, 27, pp.35-47. Easterlin, R. (2001) “Income and Happiness: towards a unified theory”, Economic Journal, 111, pp.465-484. Elster, J. (1998). “Emotions and Economic Theory”, Journal of Economic Literature, 36, pp.47-74. Encarnacion, J. (1964) "A Note on Lexicographical Preferences", Econometrica, vol.32. No.1-2, 215-217. Falkinger, J. (1990) "On Growth Along a Hierarchy of Wants", Metroeconomica, 3, pp.209-33. Ferrer-i-Carbonell, A. (2005) “Income and well-being: an empirical analysis of the comparison income effect”, Journal of Public Economics, 89, pp.997-1019. Ferrer-i-Carbonell, A. and Frijetrs, P. (2004) “How important is methodology for the estimates of the determinants of happiness?” Economic Journal, 114, pp.641-59. Frank, R. (1985). Choosing the Right Pond. New York: Oxford University Press. Frank, R. (1997) “The frame of reference as a public good, Economic Journal, 107, pp.1832-47. Frank, R. (1999). Luxury Fever, New York: The Free Press. Frey, B.and Stutzer, A. (2000). “Happiness, economy and institutions, Economic Journal 110, pp. 918-938 Frey, B. and Stutzer, A. (2002a) “What economists can learn from happiness research?”, Journal of Economic Literature, XL, pp.402-435. Frey, B. and Stutzer, A. (2002b) Happiness and Economics, Princeton: Princeton University Press. Georgescu-Roegen, N (1966) Analytical Economics, Cambridge: Cambridge University Press. Gorman, W. (1971) Preference, Revealed Preference and Indifference, in Chipman, 1971. Gui, B. (2000) “Beyond transaction: on the interpersonal dimension of economic reality”, Annals of Public and Cooperative Economics, 71, pp.139-68. Helliwell, J. (2003). “How’s life? Combining individual and national variables to explain subjective well-being”, Economic Modelling, 20, pp.331-360. Inglehart, R. (1990) Cultural Shift in Advanced Industrial Society, Princeton: Princeton University Press. Inglehart, R and Rabier, J. (1986) Aspirations adapt to situations in Frank Andrews (ed), Research on the quality of life, Ann Arbour, MI, University of Michigan, 1-56 Jackson, T. and Marks, N. (1999) “ Consumption, sustainable welfare and human needs—with reference to UK expenditure patterns between 1954 and 1994”, Ecological Economics, 28, 1999, pp. 421-441. Kahneman, D., Wakker, P. and Sarin, R. (1997) “Back to Bentham? Explorations of experienced utility”, Quarterly Journal of Economics, 112pp.375-405. Kenny, C. (1999) “Does growth cause happiness or does happiness cause growth?” Kyklos, 52, pp.3-26. Keynes, J. (1973) The General Theory of Employment Interest and Money, London: Macmillan. Lane, R. (2000) The Loss of Happiness in the Market Democracies, Yale: Yale University Press. Lavoie, M. (2004) “Post-Keynesian consumer theory: Potential synergies in consumer research and economic psychology”, Journal of Economic Psychology, 25, pp.639-49. Levi, I. (1986) Hard Choices, Cambridge: Cambridge University Press. Little, I.M.D. (1957) A Critique of Welfare Economics, Oxford: Clarendon Press. Locke, E.A. (1976) "The Nature and Causes of Job Satisfaction", in Dunnette, M (ed.) Handbook of Industrial and Organizational Psychology, Chicago: Rand McNally Loewenstein, G. (1999) “Because it is there: the challenge of mountaineering…for utility theory”, Kyklos, 52, pp.315-43. Lluch, C. (1973) “The extended linear expenditure system”, European Economic Review, 4, pp.21-32. Lluch, C., Powell, A. and Ross, A. (1977). Patterns in Household Demand and Saving, Oxford: Oxford University Press. Maddison, A. (1991) Dynamic Forces in Capitalist Development. Oxford: Oxford University Press. Maslow, A. (1954) Motivation and Personality, New York: Harper and Row. Mason, R. (1998) The Economics of Consipuous Consumption: Theory and Thought since 1700, Cheltenham: Edward Elgar. Max-Neef, M. (1995) “Economic growth and quality of life—a threshold hypothesis”. Ecological Economics, 15 pp. 115–118. Myers, D. and Diener, E. (1995) “Who is happy?”, Psychological Science, 6 pp.10-19. Oswald, A. (1997) “Happiness and economic performance”, Economic Journal, 107, pp.1815-31. Pasinetti, L. (1981) Structural Change and Economic Growth, Cambridge: Cambridge University Press. Phelps, C. (2001) “A clue to the paradox of happiness”, Journal of Economic Behaviour and Organization, 45, pp.293-300. Pfouts,R. (2002) “On the need for a more complete ontology of the consumer”, in Fullbrook, E. (ed) Intersubjectivity in Economics: Agents and Structures, London and New York: Routledge, pp. 71-84. Pugno, M. (2005) “The Happiness paradox: A formal Explanation from Psycho-economics”, paper presented in the 30th IAREP conference, Prague. Putnam, R. (2000) Bowling Alone, New York: Simon and Schuster. Rae, J. (1834) Statement of Some New Principles on the Subject of Political Economy, New York: A.M.Kelley, 1964. Ratcliffe, J., Buxman, M., McGarry, T., Sheldon, R., Chancellor, J. (2004) “Patients preferences for characteristics associated with treatment for osteoarthritis”, Rheumatology, 23, pp.337-345. Sato, K. (1972) “Additive utility functions and double-log consumer demand functions”, Journal of Political Economy, 80, pp.102-124. Schor, J. (1991) The Overworked American, NY: BasicBooks. Scitovsky, T. (1976) The Joyless Economy: An Inquiry into Human Satisfaction and Consumer Dissatisfaction, Oxford: Oxford University Press. Scott, A. (2002) “ Identifying and analysing dominant preferences in discrete choice experiments: an application in health care”, Journal of Economic Psychology, 23, pp.383-398. Stone, R. (1957) “Linear expenditure systems and demand analysis”, Economic Journal, 64, pp.511-527. Sugden, R. (2002) “Beyond sympathy and empathy: Adam Smith’s concept of fellow-feeling”, Economics and Philosophy , 18, pp.63-87. Tversky, A. (1969) Intransitivity of Preferences, Psychological Review, 76, pp.31-48. Veblen, T. (1899) The Theory of the Leisure Class, New York: Prometheus Books. Veenhoven, R. (1991) “Is happiness relative?” Social Indicators Research, 24, pp.1-34. Veenhoven, R. (2000) “Freedom and happiness: a comparative study in forty-four nations in the early 1990s” in Culture and Subjective Well-Being, Diener, E. and Suh, E. (eds), Cambridge MA: MIT Press. Veenhoven, R. (2003) “Wealth and happiness revisited: growing national income does go with greater happiness”, Social Indicators Research, 64, pp.1-27. Wright, R. (2000) Nonzero: The Logic of Human Destiny, New York: Pantheon Books. Xiao, J. and Noring, F (1994) “Perceived saving motives and hierarchical financial needs”, Financial Counseling and Planning, 5, pp.25-44.
Available Versions of this Item
- The paradox of Happiness: towards an alternative explanation. (deposited 24. Jan 2008 16:18) [Currently Displayed]