Relative income, happiness, and utility : an explanation for the Easterlin paradox and other puzzles

The well-known Easterlin paradox points out that average happiness has remained constant over time despite sharp rises in GNP per head. At the same time, a micro literature has typically found positive correlations between individual income and individual measures of subjective well-being. This paper suggests that these two findings are consistent with the presence of relative income terms in the utility function. Income may be evaluated relative to others (social comparison) or to oneself in the past (habituation). We review the evidence on relative income from the subjective well-being literature. We also discuss the relation (or not) between happiness and utility, and discuss some nonhappiness research (behavioral, experimental, neurological) related to income comparisons. We last consider how relative income in the utility function can affect economic models of behavior in the domains of consumption, investment, economic growth, savings, taxation, labor supply, wages, and migration.

Hope, happiness and hoaxes

This paper gives a psychological hypothesis for the phenomenon of Internet seduction or scams from the victim's perspective. It addresses the question of why so many people get hooked on Internet relationships and lose large amounts of money on scams and hoaxes resulting in emotional and physical trauma.

The economics of happiness : a lifetime perspective

The three studies in this thesis focus on happiness and age and seek to contribute to our understanding of happiness change over the lifetime. The first study contributes by offering an explanation for what was evolving to a ‘stylised fact’ in the economics literature, the U-shape of happiness in age. No U-shape is evident if one makes a visual inspection of the age happiness relationship in the German socio-economic panel data, and, it seems counter-intuitive that we just have to wait until we get old to be happy. Eliminating the very young, the very old, and the first timers from the analysis did not explain away regression results supporting the U-shape of happiness in age, but fixed effect analysis did. Analysis revealed found that reverse causality arising from time-invariant individual traits explained the U-shape of happiness in age in the German population, and the results were robust across six econometric methods. Robustness was added to the German fixed effect finding by replicating it with the Australian and the British socio-economic panel data sets. During analysis of the German data an unexpected finding emerged, an exceedingly large negative linear effect of age on happiness in fixed-effect regressions. There is a large self-reported happiness decline by those who remain in the German panel. A similar decline over time was not evident in the Australian or the British data. After testing away age, time and cohort effects, a time-in-panel effect was found. Germans who remain in the panel for longer progressively report lower levels of happiness. Because time-in-panel effects have not been included in happiness regression specifications, our estimates may be biased; perhaps some economics of the happiness studies, that used German panel data, need revisiting. The second study builds upon the fixed-effect finding of the first study and extends our view of lifetime happiness to a cohort little visited by economists, children. Initial analysis extends our view of lifetime happiness beyond adulthood and revealed a happiness decline in adolescent (15 to 23 year-old) Australians that is twice the size of the happiness decline we see in older Australians (75 to 86 yearolds), who we expect to be unhappy due to declining income, failing health and the onset of death. To resolve a difference of opinion in the literature as to whether childhood happiness decreases, increases, or remains flat in age; survey instruments and an Internet-based survey were developed and used to collect data from four hundred 9 to 14 year-old Australian children. Applying the data to a Model of Childhood Happiness revealed that the natural environment life-satisfaction domain factor did not have a significant effect on childhood happiness. However, the children’s school environment and interactions with friends life-satisfaction domain factors explained over half a steep decline in childhood happiness that is three times larger than what we see in older Australians. Adding personality to the model revealed what we expect to see with adults, extraverted children are happier, but unexpectedly, so are conscientious children. With the steep decline in the happiness of young Australians revealed and explanations offered, the third study builds on the time-invariant individual trait finding from the first study by applying the Australian panel data to an Aggregate Model of Average Happiness over the lifetime. The model’s independent variable is the stress that arises from the interaction between personality and the life event shocks that affect individuals and peers throughout their lives. Interestingly, a graphic depiction of the stress in age relationship reveals an inverse U-shape; an inverse U-shape that looks like the opposite of the U-shape of happiness in age we saw in the first study. The stress arising from life event shocks is found to explain much of the change in average happiness over a lifetime. With the policy recommendations of economists potentially invoking unexpected changes in our lives, the ensuing stress and resulting (un)happiness warrant consideration before economists make policy recommendations.

The mystery of the U-shaped relationship between happiness and age

In this paper, we address the puzzle of the relationship between age and happiness. Whilst the majority of psychologists have concluded there is not much of a relationship at all, the economic literature has unearthed a possible U-shape relationship with the minimum level of satisfaction occurring in middle age (35–50). In this paper, we look for a U-shape in three panel data sets, the German Socioeconomic Panel (GSOEP), the British Household Panel Survey (BHPS) and the Household Income Labour Dynamics Australia (HILDA). We find that the raw data mainly supports a wave-like shape that only weakly looks U-shaped for the 20–60 age range. That weak U-shape in middle age becomes more pronounced when allowing for socio-economic variables. When we then take account of selection effects via fixed-effects, however, the dominant age-effect in all three panels is a strong happiness increase around the age of 60 followed by a major decline after 75, with the U-shape in middle age disappearing such that there is almost no change in happiness between the age of 20 and 50.

Happiness online : supporting the emotions of emergent teachers in a virtual community

Extending Lash and Urry's (1994) notion of new "imagined communities" through information and communication structures, I ask the question: Are emergent teachers happy when they interact in online learning environments? This question is timely in the context of the ubiquity of online media and its pervasiveness in teachers' everyday work and lives. The research is important nationally and internationally, because the current research is contradictory. On the one hand, feelings of isolation and frustration have been cited as common emotions experienced in many online environments (Su, Bonk, Magjuka, Liu, & Lee, 2005). Yet others report that online communities encourage a sense of belonging and support (Mills, 2011). Emotions are inherently social, are central to learning and online interaction (Shen, Wang, & Shen, 2009). The presentations reports the use of e-motion blogs to explore emotional states of emergent primary teachers in an online learning context as they transition into their first field experience in schools. The original research was conducted with a graduate class of 64 secondary science pre-service teachers in Science Education Curriculum Studies in a large Australian university, including males and females from a variety of cultural backgrounds, aged 17-55 years. Online activities involved the participants watching a series of streamed live lectures within a course of 8 weeks duration, providing a varied set of learning experiences, such as viewing live teaching demonstrations. Each week, participants provided feedback on learning by writing and posting an e-motion diary or web log about their emotional response. The blogs answered the question: What emotions you experience during this learning experience? The descriptive data set included 284 online posts, with students contributing multiple entries. The Language of Appraisal framework, following Martin and White (2005), was used to cluster the discrete emotions within six affect groups. The findings demonstrated that the pre-service teachers' emotional responses tended towards happiness and satisfaction within the typology of affect groups - un/happiness, in/security, and dis/satisfaction. Fewer participants reported that online learning mode triggered negative feelings of frustration, and when this occurred, it often pertained expectations of themselves in the forthcoming field experience in schools or as future teachers. The findings primarily contribute new understanding about emotional states in online communities, and recommendations are provided for supporting the happiness and satisfaction of emergent teachers as they interact in online communities. It demonstrates that online environments can play an important role in fulfilling teachers' need for social interaction and inclusion.

Effects of self-reported wisdom on happiness: Not much more than emotional intelligence?

Wisdom and emotional intelligence are increasingly popular topics among happiness scholars. Despite their conceptual overlap, no empirical research has examined their interrelations and incremental predictive validities. The aims of this study were (a) to investigate associations between multidimensional conceptualizations of self-reported wisdom (Ardelt in Res Aging 25(3):275-324, 2003, 2004) and emotional intelligence (Davies et al. in J Pers Soc Psychol 75:989-1015, 1998) and (b) to examine the joint effects of self-reported wisdom and emotional intelligence on dimensions of happiness (life satisfaction as well as positive and negative affect). Data were provided by two samples: 175 university students and 400 online workers. Correlations between a composite wisdom score, a composite emotional intelligence score, and happiness facets were positive and moderate in size. Regression analyses showed that the effects of composite wisdom on life satisfaction and positive affect (but not negative affect) became weaker and non-significant when composite emotional intelligence was controlled. Additional analyses including three dimensions of the self-reported wisdom (cognitive, reflective, and affective wisdom) and four dimensions of emotional intelligence (self- and others-emotions appraisal, use and regulation of emotion) revealed a more differentiated pattern of results. Implications for future research on wisdom and happiness are discussed.

A Continuation of the Happiness Success Story: Does Happiness Impact Service Quality?

A Continuation of the Happiness Success Story: Does Happiness Impact Service Quality? The effects of long-term happiness on various outcomes for the individual and society have been studied extensively in psychology but the concept has so far received limited research attention in marketing. Happiness is defined as a summary judgment of one’s life. Previous research has shown that happiness is a relatively stable perception of happiness in one’s life. Thus, happiness in this thesis is long-term and more global as a phenomenon than in the marketing literature, where happiness is commonly conceptualized as an emotion, feeling or momentary state of happiness. Although there is plenty of research on consumer affect and its impact on service responses, there are no studies on the effect of long-term happiness on service evaluation. As empirical evidence suggests that happy people perceive smaller and bigger events in life more positively than less happy people and that happy people are more prone to experience positive feelings and less of negative feelings it was hypothesized that happiness affects service quality directly but also indirectly through mood. Therefore, in this thesis, it was set out to explore if happiness affects customer-perceived service quality. A survey method was adopted to study the relationship between happiness, mood and service quality. Two studies were conducted with a total of 17 investigated services. Out of the 17 different investigated cases, happiness was found to positively affect service quality in only four cases. The results from the two studies also provide weak support for a positive relationship between mood and service quality. Out of the 17 cases, mood was found to positively affect service quality in only three cases and the results provide additional evidence for the stream of literature arguing that affect plays no or only a minimal role in service quality. Based on the collective results in this study, it can be concluded that the evidence for a positive relationship between happiness, mood and service quality is weak. However, in this thesis, it was recognized that the happiness concept is relevant for marketers and serve potential to explain marketing related phenomena. Marketing researchers who are interested in studying happiness are advised to focus research attention on consumer well-being.

Philosophy as a Path to Happiness : Attainment of Happiness in Arabic Peripatetic and Ismaili Philosophy

The aim of the dissertation is to explore the idea of philosophy as a path to happiness in classical Arabic philosophy. The starting point is in comparison of two distinct currents between the 10th and early 11th centuries, Peripatetic philosophy, represented by al-Fārābī and Ibn Sīnā, and Ismaili philosophy represented by al-Kirmānī and the Brethren of Purity. They initially offer two contrasting views about philosophy in that the attitude of the Peripatetics is rationalistic and secular in spirit, whereas for the Ismailis philosophy represents the esoteric truth behind revelation. Still, they converge in their view that the ultimate purpose of philosophy lies in its ability to lead man towards happiness. Moreover, they share a common concept of happiness as a contemplative ideal of human perfection, which refers primarily to an otherworldly state of the soul s ascent to the spiritual world. For both the way to happiness consists of two parts: theory and practice. The practical part manifests itself in the idea of the purification of the rational soul from its bodily attachments in order for it to direct its attention fully to the contemplative life. Hence, there appears an ideal of philosophical life with the goal of relative detachment from the worldly life. The regulations of the religious law in this context appear as the primary means for the soul s purification, but for all but al-Kirmānī they are complemented by auxiliary philosophical practices. The ascent to happiness, however, takes place primarily through the acquisition of theoretical knowledge. The saving knowledge consists primarily of the conception of the hierarchy of physical and metaphysical reality, but all of philosophy forms a curriculum through which the soul gradually ascends towards a spiritual state of being along an order that is inverse to the Neoplatonic emanationist hierarchy of creation. For Ismaili philosophy the ascent takes place from the exoteric religious sciences towards the esoteric philosophical knowledge. For Peripatetic philosophers logic performs the function of an instrument enabling the ascent, mathematics is treated either as propaedeutic to philosophy or as a mediator between physical and metaphysical knowledge, whereas physics and metaphysics provide the core of knowledge necessary for the attainment of happiness.