Alois Stutzer and Bruno S . Frey recent Advances in the Economics of Individual Subjective Well - Being

questions about the good life and individual happiness have a long tradition in philosophy. For centuries, people developed ideas about the nature of human flourishing and well-being, its sources and its relevance for individual behavior. 1 Over the last decades, empirical research on subjective well-being in the social sciences has provided a major new stimulus of the discourse on individual happiness. Initially, the empirical study of happiness has been mainly the prov-However, there have also been important contributions by sociologists (for example, Veenhoven 1993) and political scientists (Lane 2000, for example). Only recently has this research been linked to economics. The early contribution of Richard Easterlin (1974) was noted by many economics scholars, but at the time it found few followers. The same may be said of Tibor Scitovsky's book The Joyless Economy (1976). 2 The situation has changed substantially since then. In this paper, we present recent contributions of economics to the study of individual happiness. They are based on a subjective view of utility recognizing that everyone has his or her own ideas about happiness and the good life, and that observed behavior is an incomplete indicator 680 social research of individual well-being. If one adopts this view, an individual's welfare can nevertheless be captured and analyzed: a person can be asked how satisfied he is with his or her life. It is a sensible tradition in economics to rely on the judgment of the persons directly involved. People are considered to be good judges of the overall quality of their lives, and it is a straightforward strategy to ask them about their well-being. Much of previous happiness research in economics takes reported subjective well-being as a proxy measure for individual welfare. " Subjective well-being " is the scientific term used in psychology for an individual's evaluation of the extent to which he or she experiences positive and negative affect, happiness, or satisfaction with life. This indicator offers a complementary approach to traditional welfare measure focusing on individual income or gross national product (GNP) per capita. Measures of subjective well-being allow for the study of the relationship between individual well-being and economic conditions such as income, unemployment, inflation, and inequality and the analysis of the determinants of individual well-being in general. It is understood that economic activity is certainly not an end in itself, but only has value in so far as it contributes to human happiness. 3 …