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HAPPINESS

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Group 3 HAPPINESS

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Schools of thought view

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Group 3 HAPPINESS

Happiness
and
Economics
Group 3 HAPPINESS

Happiness and
Economics
According to Sigmund Freud, happiness, in the strictest sense of
words, comes from the satisfaction of needs which have dammed
up to a high degree

Happiness has long been considered an ”unscientific” concept by

economists
However, over the last ten years, there has been a transformation
of public interest in happiness

 Policy-makers worldwide increasingly see it as an important

and overarching objective of public policy (HPR 2022)
Group 3 HAPPINESS

Happiness and
Economics
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9 domains of Happiness

Psychological Health Time use Education Cultural diversity

well-being and resilience

Good governance Community vitality Ecological Living

diversity and standards
resilience

Each economic school of thoughts have their own perspectives

about certain domains of happiness, thus by loo 
Group 3 HAPPINESS

Schools of
thought view
Group 3
Neoclassical Economics
Neoclassical economics view:
The pursuit of happiness and
well-being solely based on
material prosperity
(Membiela-Pollán et al., 2019)
HAPPINESS
CORE ASSUMPTIONS
Human beings are reduced to income-constrained,
rational consumers and utility maximizers operating within
an economy where prices for goods and services and
income distribution are determined through the dynamics
of supply and demand (Anielski & Samalavičius 2012).
Þ The concept of utility was not only an introspective,
psychological “substance” upon which one could
construct the theory of demand and consumption, but
also a universal “measure” happiness well-being (Lewin
1996).
Neoclassical economic theory assumes that higher income
correlates to higher levels of utility and economic welfare
Þ more income = obtain more goods = more utility/happiness
Þ Rising income enables a person to buy goods and services
considered essential to the basics of life – food, shelter,
health care and education.
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Limitation of the link between

Easterlin Paradox income and happiness
According to Richard Easterlin, once a developed country passes a
threshold average income, more growth doesn’t increase average
reported happiness. For developed countries, higher levels of a country’s
GDP per capita did not relate to a higher level of happiness reported by
citizens – diminishing marginal utility of wealth and income

Why rising GDP may not increase happiness?

• Higher pollution from increased consumption. The environmental
damage of higher growth
• Higher levels of congestion and crowding due to more consumption
and population growth.
• Rising levels of inequality mean people don’t feel relatively better
off.
• The problem of affluence – Rise in obesity, stress of striving for
higher paid work. Avnet Offer in – Challenge of Affluence: Self-
Control and Well-being argues higher growth gives more income,
more choices, but also can make it harder to do the right thing.
(e.g. growth in obesity because it’s hard to say no to cheap food.)
(Pettinger 2022)
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Neoclassical Economics
Recommend for the pursuit of Societal happiness:
Neoclassical economic view argues that governments unequivocally and positively affect social well-being
or happiness of the citizens (Bjørnskov et al., 2007). 
 Neoclassicists emphasize the role of government in  Government is the only possible economic agent to
solving market failures by facilitating and maintaining provide public goods, such as national defense and
suitable institutions for market functioning and infrastructure, which private producers fail to
transactions, as well as intervening to correct supply due to their specific characteristics
externalities.  (Musgrave, 1959). 

Þ Government performs as a ‘benevolent dictator’ that always tries to maximize citizens’ interests,
Þ which means the general social average life satisfaction would increase with government size
(Bjørnskov et al., 2007).
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Neoclassical Economics Recommend for the pursuit of Societal happiness (Cont.):

The government size = the relative importance of all  The positive effect of government quality on happiness
government activities in society taken together.  is supported by many empirical researches in
developed countries where big governments offer
Specifically, the size and volatility of government generous public services. 
spending have significant effects on social well-being in
either way (Dao 2017): o European birth cohorts are happier than the American
ones due to more comprehensive social safety net and
 Higher public spending in fields like education, lower tuition fees (Blanchflower & Oswald 2008)
health, and development could result in higher living
standard which means higher happiness level.  o A study focusing on 21 traditional members of the
OECD (well-developed and have relatively high-quality
 Lower government spending could imply that the governments) finds that bigger government provides
government is applying a lower tax rate, which might happier lives to their citizens (Radcliff 2013).
boost the economic growth that can also lead to an
increasing the living standard in the country. 
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Behavioral Economics Individuals’ happiness can differ depending on:

For Behavioural economists    Past experiences
Any additional boost in the
level of happiness depends on:
• Habituation
• Adaptation
• Remembered Utility
(Cartwright 2014; Mallard
2017)
 The surrounding environment 
  Past actions towards other individuals 
(Cartwright 2018; Tsutsui et al. 2016; Sheremeta
2020)
Ex: A person who earns $200,000 a year won’t feel
as happy when winning a $10,000 lottery when
compared to a person who only earns a minimum
wage of $15,000 a year 
Þ Explains why happiness in developed countries
does not increase accordingly with increases in
income while the opposite applies to developing
countries.
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Behaviorial Economics

Countries' Solution to Happiness:

 For Bhutan: thanks to the country’s geographical location along with the government policy that
In some
tries of the
to control happiestcitizens
globalization, countries in preserve
can still the world like
their Bhutanway
Buddhism orofFinland,
life where “material
and spiritual development happen together” (Canan 2010).
governments
 For helped support
Finland: the government tries tothe idea the
preserve of prioritizing happiness
Finnish culture that focusesasona cooperation,
measure
rather than competition, not to mention, Finnish people feel secure and do not worry about the
of a nation’s
outside world ingrowth
the samebywaycreating policies
as the people that other
in many can help balance
nations thanks toeconomic
their low crime
rate.  (Helsinki Times 2021).
growth
 Both and subjective
countries well-being
also have policies that for its citizen,
preserve however,
beautiful there
landscapes and is no one
nature (Canan
2010; Helsinki Times 2021).
solution
 With this, for all on
based nations
what we learned about Adaptation and Habituation, people in these
countries have grown accustomed to a more laid-back and peaceful way of life that they are
satisfied with, hence, making them happier 
Group 3 HAPPINESS

Buddhist Economics
Biography:
Buddhist economics is based on three truths:
Buddhist economics rooted in :
1. Human nature
• long- term is kind and altruistic.
perspectives
• Equality
2. People are interdependent with each other
• reduced consumption
3. People are interdependent
• increased quality of life with nature
(Brown n.d.)
Buddhist inspiration:
 Develop a peaceful society based on organic
agriculture in harmony with the ecosystem, small-
E.F. Schumacher, 1973 scale, non-violent technology and wisdom
(Valliere 2015)
(Hartley & Marks
Publishers 1999)
 Group 3 HAPPINESS

Buddhism
Economics
Indicators of Happiness:
• The degree of trust, social capital, cultural continuity and social solidarity.
• The general level of spiritual development and emotional intelligence
• The degree to which basic needs are satisfied
• Access to and the ability to benefit from health care and education
• The level of environmental integrity, including species loss or gain pollution
and environmental degradation
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Buddhism
Economics
Country Policies
Roles of Government (support meaning full, Individuals Corporations
sustainable life for all)
• Rules, incentives to structure • Tax and transfer • Live Mindfully • Green
markets, along with social • Sustainable agriculture with Love, production and
programs to achieve social • Measure economic Compassion Green Product
goals performance holistically and Wisdom • Living wages and
• Transition to modern, low • Peace and prosperity • Work together balance life
carbon, equitable economy and take
• Create an economy that action
support meaningful life for
all people and cares for
Mother Earth
 Group 3 HAPPINESS

Buddhism
Economics
Local Communities :
Propositions
Local for a healthy
Communities : economy :
What we need us a society where people collaborate to find the best solutions for individuals,

• Local
Workplaces society
have to small-scale
be created in andareas
the naturewhere people are living
and Regional solutions better than giant globalized
• Great importance to describe and discuss the view of nature and society that underlies
• business
Workplace must betheory
present-day economic cheapandenough
practice to create in large numbers

• A
Production methods
network-based must bethat
structure relatively
can copesimple
with the multiplicity of many

• interrelated
Production should be mainly
small-scale unitsfrom local material and mainly for local use
(Schumacher 1989)
Group 3 HAPPINESS

Perspectives conclusion
1. Income level is one way to
obtain more utility and
happiness Real policies:
2. Government has crucial
roles to maximize citizen’ Korea welfare
interest system
3. Create balance economic
growth and citizens welfare
Group 3 HAPPINESS

Korea current welfare aspects:

1. Korea welfare system

2. Public Healthcare
3. Income inequality and Employment rate
4. Childcare, family support and education
5. Life satisfaction
Group 3 HAPPINESS

1. Korea Welfare system

Conservative welfare ideology

- Individual/household responsibility
- Opposing welfare dependency
- Opposing redistributive welfare programs
(Aspalter 2001)

Korea welfare system (Lee 2015)

Group 3 HAPPINESS

1. Korea welfare system

Government spending on public sector

- 4th lowest country in government’ social spending in public sector
- 7th lowest country in household social benefits

(OECD
n.d.)
Group 3 HAPPINESS

2. Public Healthcare

Health policies and government spending

- Universal health coverage:
National Health Insurance
(NHI) has covered 98.6% of
population (Korea.net n.d.)

- Government health
spending: about OECD
average
(OECD
n.d.)
Group 3 HAPPINESS

2. Public Healthcare

Life expectancy and self-reported health

- 5th highest life-expectancy
83.3 years
- Lowest ranking in self-reported health: Life expectancy
(1) High Alcohol assumption (men)
(2) High daily Tobacco assumption (men)
(3) High obesity rate among children in 5-9 41/41
years old Self-reported health in OCED countries
(4) Mental illness: highest suicide rates
among OECD countries (OECD Better Life Index n.d.)
(OECD iLibrary 2020)
 Group 3 HAPPINESS

3. Income inequality and Employment rate

Labor market and income

inequality
- Low ranking in employment
rate: Highly competitive labor
market, lack of practical
(professional) skills in fresh
graduates’ employees
 High youth unemployment
rate

- High income inequality: high

gender and age earning gaps (OECD
n.d.)
(Lee 2017)
 Group 3 HAPPINESS

4. Childcare, family support and Education

Parents’ burden
- Low parental fees support

- Hard to balance work and life

• 19.7% of employees must work over 50 hours per week
(37/41 among OECD countries)
• 14.8 hours per day for leisure and personal care
(25/41 among OECD countries)

(OECD Better Life Index n.d.)

(OECD
n.d.)
 Group 3 HAPPINESS

4. Childcare, family support and Education

Child’ burden
- Brutal academic race: begins from
kindergarten, pressure from extra classes
- Lack of mental care
- Formal teaching and impractical
- Lacking vocational education

(Park 2021)

 Pressure for both parents and child

 Lowest fertility rates
(OECD
n.d.)
Group 3 HAPPINESS

5. Life satisfaction

Life satisfaction
Life satisfaction: how 5.8/10
people evaluate their life Life satisfaction score
overall as they based on
above aspects
35/41
(OECD Better Life Index Among 41 OECD countries
n.d.)
Group 3 HAPPINESS

Korea overall happiness among OECD

- Highest suicide rates (OECD n.d.)
countries
- Bottom 3 lowest countries in Happiness index in 2018-2020 (Jae-hee 2021)

(OECD n.d.)n.d.)
(OECD (The Korea Times n.d.)
Group 3 HAPPINESS

South V/ Nordic countries

Conservative welfare S
Korea Social Democratic
1. Individual/household welfare
responsibility 1. Redistributive welfare programs: Tax
2. Opposing welfare redistribution to reduce income inequality
dependency 2. Board universal welfare services/
policies:
3. Opposing redistributive • Education system: free, focus on student
welfare programs mental, wellbeing, and encourage
4. Low government spending on vocational education
social welfare • Free/partly free healthcare
• High parental fees
3. Large government spending on social
welfare
(Aspalter 2001)  Top Happiness index countries (Deloitte n.d.)
Group 3 HAPPINESS

Expert opinion &

policy
recommendation
 Group 3 HAPPINESS
Recommendation learnt from
the Nordic welfare model:
- Increase government spending for public
sectors
- Work-Study Dual System: encourage vocational
education to meet industrial needs, helping to
increase employment rate and lower the income gap
(Statista 2022)
- Student wellbeing: launch programs for student
mental healthcare and wellbeing and reduce extra
classes’ stress
- Support parents: extend of duration for maternity
and paternity leaves to have more time for their kids
and work-life balance
Expert opinion
‘Increase investment in public health care and apply
health system of the Netherlands - a combination of
mandatory universal coverage with competing private
health insurers’
- Kwon Soon-man, professor at Seoul National
University and welfare policy expert
‘Focus on employment insurance, families and
childcare to increase fertility rates and wellbeing.
Government should also increase parental insurance
which is paid by a parental insurance fund not by
employers’
-Yang Jae-jin, professor at Yonsei University
and public administration expert
‘Support the poor through encouraging welfare
services and enforce the law of land ’
-Kim Chung-ho, head of the Seoul-based
Center for Free Enterprise-
(Korea Herald 2012)
Group 3
Thanks For Watching!
 Group 4 Assignment 3A – Group Assignment

REFERENCES
Brown, C 2017, ‘Buddhist Economics By Clair Brown’, www.youtube.com, viewed 14 September 2022, <https://www.youtube.com/watch?v=88RX5A2iezs&t=2s>.
Hartley & Marks Publishers 1999, ‘“Small Is Beautiful” Quotes’, Schumacher Center for New Economics, viewed 10 September 2022,
<https://centerforneweconomics.org/envision/legacy/ernst-friedrich-schumacher/small-is-beautiful-quotes/>.
Jakobsen, O 2017, Transformative Ecological Economics : Process Philosophy, Ideology and Utopia, Taylor & Francis Group, London, UNITED KINGDOM, viewed 5 September
2022, <http://ebookcentral.proquest.com/lib/rmit/detail.action?docID=4845506>.
Schumacher, EF 1989, ‘Peace and Permanence’, in Small is beautiful : economics as if people mattered, HarperPerennial, New York, p. 17, viewed 4 September 2022,
<https://www.ee.iitb.ac.in/student/~pdarshan/SmallIsBeautifulSchumacher.pdf>.
Valliere, D 2015, ‘Entrepreneurial Action: Enacting Buddhist Economics in the Small’, Semantic Scholar, viewed 15 September 2022,
<https://www.semanticscholar.org/paper/Entrepreneurial-Action%3A-Enacting-Buddhist-Economics-Valliere/1222daa37446ef3de026c421b68cd3a718aad391#paper-header>.

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 Group 4 Assignment 3A – Group Assignment

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