The Pursuit of Happiness: the Structure of Happiness Based on Economic and Non-Economic Factors

Document Type : Research Paper

Authors

Faculty of Management and Economics, Science and Research Branch, Islamic Azad University, Tehran, Iran

Abstract

Relying on the objective utility and measuring the level of happiness of people based on their choices is related to homo-economicus and a limited definition of human, which has been used as a presupposition by conventional theories in economics for years. Many studies show the deviation of reality and experimental data from the predictions of standard theories about happiness. In this study, we will try to introduce a structure for happiness so that in addition to considering the economic aspects, the effect of other fields on people's perception of happiness or subjective well-being can be determined. Based on the attitude of behavioral economics, we have re-examined utility and happiness, due to the data collected from 192 students in different grades of university. We have confirmed a structure for happiness, which is related to the psychological well-being. Economic well-being, social well-being and physical well-being also affects happiness indirectly through psychological well-being. This study is interdisciplinary research, which seeks to expand the conventional economic theories by replacing the real human being instead of the homo-economicus. The results show that the main source of people's happiness is their psychological well-being, and in psychological well-being, the most important factor is physical well-being. The second and third order goes to social well-being and economic well-being. Income or economic factors, which is the main in determining people's happiness in conventional prospect, is only one of the determining factors of psychological well-being, which happiness originates from.

Keywords

Main Subjects


Argyle, M. (1989). The Psychology of Happiness. London: Routledge.
Assari, S. (2019). Race, Education Attainment, and Happiness in the United States. International Journal of Epidemiologic Research, 6(2), 76-85.
Benabou, R., & Tirole, J. (1999). Self-confidence and Social Interaction. NBER Working Paper Series, 7585, 1-45.
Brickman, P., & Campbell, D. T. (1971). Hedonic Relativism and Planning the Good Society. In M. H. Hapley (Ed.), Adaptation level Theory (287–305). New York: Academic Press.
Brickman, P., Coates, D., & Janoff-Bulman, R. (1978). Lottery Winners and Accident Victims: is Happiness Relative? Journal of Personality and Social Psychology, 36, 917-927.
Clark, A. E., & Oswald, A. J. (1994). Unhappiness and Unemployment. Economic Journal, 104, 648-659.
Kahneman, D. (2003). Well Being: The Foundations of Hedonic Psychology. New York: Russell Sage Foundation.
Darity, W., & Goldsmith, A. H. (1996). Social Psychology, Unemployment, and Macroeconomics. Journal of Economic Perspectives, 10(1), 121-40.
Frank Robert, H. (1999). Luxury Fever: Money and Happiness in an Era of Excess. Princeton, NJ: Princeton University Press.
Duesenberry, J. S. (1949). Income, Saving and the Theory of Consumer Behavior. Cambridge, MA: Harvard University Press.
Diener, E. (1984). Subjective Well-Being. Psychological Bulletin, 93, 542-575.
Diener, E., & Suh, E. M. (2000). Culture and Subjective Well-Being. Cambridge, MA: MIT Press.
Diener, E., Suh, E. M., Lucas, R. E., & Smith, H. L. (1999). Subjective Well-Being: Three Decades of Progress. Psychological Bulletin, 125(2), 276-302.
Eckman, P., Davidson, R. J., & Friesen, W. V. (1990). The Duchenne Smile: Emotional Expression and Brain Physiology II. Journal of Personality and Social Psychology, 58(2), 342-353.
Frey, B. S., & Stutzer, A. (2002). What Can Economists Learn From Happiness Research? Journal of Economic Literature, 40(2), 402-435.
---------- (2000). Happiness, Economy, and Institution. Economic Journal, 110(466), 918-938.
Frijters, P., Haisken-DeNew. J. P., & Shields, M. A. (2004). Money does Matter! Evidence from Increasing Real Income and Life Satisfaction in East Germany Following Reunification. American Economic Review, 94, 730-740.
Gerdtham, U. G., & Johannesson, M. (2001). The Relationship between Happiness, Health and Socio-Economic Factors: Results Based on Swedish Micro Data. Journal of Socio-Economics, 30, 553-557.
Graham, C., & Pettinato, S. (2002). Happiness and Hardship: Opportunity and Insecurity in New Market Economies. Washington, DC: Brookings Institution Press.
Grover, S., & Helliwell, J. F. (2019). How’s Life at Home? New Evidence on Marriage and the Set Point for Happiness. Journal of Happiness Studies, 20(2), 373-390.
Hair Jr, J. F., Babin, B. J., & Krey, N. (2017). Covariance-based Structural Equation Modeling in the Journal of Advertising: Review and Recommendations. Journal of Advertising, 46(1), 163-177.
Headey, B., & Wearing, A. (1992). Understanding Happiness: A Theory of Subjective Well-Being. Melbourne: Longman Cheshire.
Hermalin, B. E., & Isen, A. M. (1999). The Effect of Affect on Economic and Strategic Decision Making. University of California at Berkeley, Working Paper, E99-270, 1-31.
Hernandez, R., Bassett, S. M., Boughton, S. W., Schuette, S. A., Shiu, E. W., & Moskowitz, J. T. (2018). Psychological Well-Being and Physical Health: Associations, Mechanisms, and Future Directions. Emotion Review, 10(1), 18-29.
Hirsch, F. (1976). The Social Limits to Growth. Cambridge, MA: Harvard University Press.
Hollander, H. (2001). On the Validity of Utility Statements: Standard Theory versus Duesenberry’s. Journal of Economic Behavior and Organization, 45, 227-249.
Hooper, D., Coughlan, J., Mullen, M. (2008). Structural Equation Modelling: Guidelines for Determining Model Fit. Electronic Journal of Business Research Methods, 6(1), 53–60.
Kahneman, D., & Thaler, R. (1991). Economic Analysis and the Psychology of Utility: Applications to Compensation Policy. The American Economic Review, 81(2), 341-346.
Kahneman, D., & Tversky, A. (2000). Experienced Utility and Objective Happiness: A Moment-Based Approach. In Choices, Values and Frames (673-692). New York: Cambridge University Press and the Russell Sage Foundation.
Kahneman, D., & Varey, C. (1991). Notes on the Psychology of Utility. In J. Roemer and J. Elster (Eds.), Interpersonal Comparisons of Wellbeing (127-163). New York: Cambridge Press.
Kahneman, D., Wakker, P. P., & Sarin, R. (1997). Back to Bentham? Explorations of Experienced Utility. Quarterly Journal of Economics, 112, 375-405.
Lelkes, O. (2006). Tasting Freedom: Happiness, Religion and Economic Transition. Journal of Economic Behavior & Organization, 59(2), 173- 194.
Loewenstein, G. (1999). Because it is there: The Challenge of Mountaineering for Utility Theory. Kyklos, 52(3), 315-343.
Lucas, R. E. (2005). Time does not Heal All Wounds: A Longitudinal Study of Reaction and Adaptation to Divorce. Psychological Science, 16, 945-950.
Lucas, R. E., Clark, A. E., Georgellis, Y., & Diener, E. (2004). Unemployment Alters the Set Point for Life-Satisfaction. Psychological Science, 15, 8-13.
Manski, C. F. (1993). Identification of Endogenous Social Effects: The Reflection Problem. Review of Economic Studies, 60, 531-542.
Mahmoodi, Z., Yazdkhasti, M., Rostami, M., & Ghavidel, N. (2022). Factors Affecting Mental Health and Happiness in the Elderly: A Structural Equation Model by Gender Differences. Brain and Behavior, 12(5), 1-8.
Namazie, C., & Sanfey, P. (2001). Happiness and Transition: the Case of Kyrgyzstan. Review of Development Economics, 5, 392-405.
Oswald, A. J. (1997). Happiness and Economic Performance. Economic Journal, 107, 1815-1831.
Oswald, A. J., & Powdthavee, N. (2008). Does Happiness Adapt? A Longitudinal Study of Disability with Implications for Economists and Judges. Journal of Public Economics, 92(5-6), 1061-1077.
Palmore, E. (1969). Predicting Longevity: A Follow-up Controlling for Age. Journal of Gerontology, 39, 109-116.
Pavot, W., & Diener, E. (1993). Review of the Satisfaction with Life Scale. Psychological Assessment, 5, 164-72.
Powdthavee, N. (2005). Unhappiness and Crime: Evidence from South Africa. Economica, 72, 531-547.
Rabin, M. (1998). Psychology and Economics. Journal of Economic Literature, 36(1), 11-46.
---------- (1997). Fairness in Repeated Games. University of California at Berkeley, Working Paper, 97-252, 1-71.
Ravallion, M., & Lokshin, M. (2002). Self-rated Economic Welfare in Russia. European Economic Review, 46, 1453-1473.
Rizzato, M., Antonelli, M., Sam, C., Di Dio, C., Lazzeroni, D., & Donelli, D. (2023). Happiness and Socio-Demographic Factors in an Italian Sample: A Propensity-Matched Study. Healthcare, 11(11), 1-16.
Sales, S. M., & House, J. (1971). Job Dissatisfaction as a Possible Risk Factor in Coronary Heart Disease. Journal of Chronic Diseases, 23, 861- 873.
Theodossiou, I. (1998). The Effects of Low Pay and Unemployment on Psychological Well-Being: A Logistic Regression Approach. Journal of Health Economics, 17, 85-104.
Winkelmann, L., & Winkelmann, R. (1998). Why are the Unemployed so Unhappy? Economica, 65(257), 1-15.
Zimmermann, A., & Easterlin, R. A. (2006). Happily Ever After? Cohabitation, Marriage, Divorce, and Happiness in Germany. Population and Development Review, 32, 511-528.