I've written a number of posts about happiness economics, which essentially involves the study of subjective wellbeing or life satisfaction. Not everyone is happy about the measurement of life satisfaction, but Andrew Clark (Paris School of Economics is). Back in 2018, he wrote this article, published in The Review of Income and Wealth (open access), which summarises the state of research in happiness economics, and proposes some future directions for this research.
Clark's summary of the last forty years of happiness economics research is difficult to succinctly summarise (since, as a summary itself, it extends to around 16 pages), but in short it covers: (1) What makes people happy, or what are the factors that are correlated with subjective wellbeing?; (2) What do happy people do, or what are the impacts of higher (or lower) subjective wellbeing?; and (3) What else can we do with subjective wellbeing data? If you're looking at understanding the current state of the research literature (as of 2018) on happiness economics, then this would be an excellent starting point.
However, Clark then looks forward, anticipating future directions for happiness economics research. Clark first laments the lack of diversity in the datasets that are used, with most research based on data from Australia (HILDA), Germany (SOEP), or the UK (BHPS). I think he over-states the issue here, as there is significant cross-country research using the Gallup World Poll, the World Values Survey, as well as research based on the US General Social Survey and other similar surveys in other countries.
Second, Clark highlights that:
It is undoubtedly true that we care about average wellbeing in a society, but we probably care about its distribution too: for given average satisfaction, we would prefer the variance of well-being to be lower, as this would imply fewer people with low well-being (and our social-welfare function may put more weight on those in misery than on those with high subjective wellbeing). There are very few contributions in this sense.
That definitely remains true, and it would be interesting, as one example, to know whether there is a happiness Kuznets Curve (see also this post). It would also be interesting to better understand the relationship (if any) between happiness inequality and income inequality (that is my interest, rather than anything Clark noted in his paper). Clark also raises better understanding quantile effects - that is, different relationships between subjective wellbeing and other variables at different points in the happiness distribution.
Third, Clark notes that:
Research has also been concentrated on the adult determinants of adult subjective well-being. There are at least two possible extensions here. One is to consider the distal (childhood and family) correlates of adult well-being... The other is to consider childhood well-being as an outcome in its own right.
These are interesting questions, with very real potential for real-world impact. Given the rise of a focus on wellbeing, particularly by governments across the more developed countries (more on that in a future post), the fact that we know little about subjective wellbeing in childhood, and how childhood circumstances (including subjective wellbeing) affect subjective wellbeing in adulthood, seems like an important research gap to fill. However, such research ideally would rely on long-term data, and careful research design to establish causal relationships. These are the next two points that Clark makes (although in the case of causality, he focuses on exogenous changes, but that is not the only research design that can extract causal estimates).
Clark then highlights research on brain activity and its links with subjective wellbeing, and the role of genetics. Neuroeconomics is growing in influence, but the role of genetics is broadly underexplored. Finally, Clark notes that we still don't really know the 'best' way to measure subjective wellbeing. Unfortunately, despite decades of research, we haven't really nailed the measurement problem (and that has been the source of many of the arguments against this field of research).
There is a lot of exciting potential in happiness economics, and I look forward to seeing what continues to come out of this field.
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