An Introduction to the

Economics of Happiness
Andrew Oswald
University of Warwick
Ec 135

Human beings have feelings.

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Humans have feelings, and

feelings matter.

Why should we care about the

measurement of happiness?

and how could it be done?

Let’s start with some general

background.
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Conventionally defined:

Conventionally defined:
• Economics is a social science
concerned with the ‘efficient
allocation of scarce resources’

Conventionally defined:
• Economics is a social science
concerned with the ‘efficient
allocation of scarce resources’

We owe this definition to Lionel

Robbins of the London School
of Economics.

For a long time, it

served us well.

But perhaps the time has come

to think differently – and to
define economics differently.

An alternative definition:

An alternative definition:

• Economics is a social science

concerned with the best way to
allocate plentiful resources

An alternative definition:

• Economics is a social science

concerned with the best way to
allocate plentiful resources to
maximize a society’s well-being
and mental health.

An alternative definition:

• Economics is a social science

concerned with the best way to
allocate plentiful resources to
maximize a society’s well-being
and mental health.

One backdrop

One backdrop

• The intriguing, and worrying,

‘Easterlin Paradox’

• Economic growth doesn’t seem

to be making us happier.

Average Happiness and Real GDP per Capita

Over Time in the USA: Mid 1970s – Mid 1990s

That’s the classic diagram.

That’s the classic diagram.

What about now, over a longer

time period, and with more
detail?

Survey question for the USA

• “Taken all together, how would you say
things are these days—would you say