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Transcript of Happiness economics with notes
Beyond Needs Gratification:
Happiness Economics as
Human FlourishingJovi C. Dacanay
School of EconomicsUniversity of Asia and the Pacific
14th Young Economists' Convention8th International Conference
March 6-7, 2015 De La Salle University Henry Sy Sr. Building
1. Beyond Needs Gratification: Nature of Economics
2. Foundations of Economic Thought
3. Happiness as Objective and Subjective Well-Being
4. Economics towards human flourishing
Outline
What is the nature of economics?According to Mankiw (2011). Economics is the study
of how society manages its scarce resources.
What is the nature of economics?According to Robbins (1952). It is the science which studies human behavior as a relationship between ends and scarce means that have alternative uses.
What is the nature of economics?According to Samuelson (1967). It is the study of how men
and society choose, with or without the use of money
The discoveries of economics lead to the formulation of
economic policy.
A high level of theoretical conceptualization with methodical rigor but a failure to operationalize the
maximization problem into the actual achievement of happiness.
Why? Emphasis on the satisfaction of wants as the main goal of economics. Sidestep wealth creation. “wealth is
a fundamental concept in economics indeed, perhaps the conceptual starting, no consensus on what is
wealth.” (Heilbroner 1987)
A Richer concept of Wealth Creation (Georges Enderle 2010)
“Making money” can be destroying wealth while creatingwealth can be losing money.
A thorough understanding of wealth creation enables us tosharpen our economic critique of fashionable and short-sightedmanagement recipes and to bring the power of ethics to bear
where it matters most. (Enderle 2010)
St. Thomas Treatise on Justice influenced
more than 6 centuries of authors
on economics, including
British economists such as Hutcheson,
Adam Smith, Austrian Economists such as Menger and
Böhm-Bawerk.
Source: Chafuen (2003)
Source: Chafuen (2003)
The personal desire to achieve
happiness has become an impetus
for economists, sociologists and psychologists to determine the
attributes explaining happiness.
Happiness as Objective and
Subjective Well-Being
Necessary conditions for human flourishing:1st. Basic material goods to thrive and survive in existence2nd. Participate as an intelligent and free agent in the market economy
Table 1. Four Qualities of Life Outer Qualities Inner Qualities
Life-chances
Livability of environment. Refers to good living conditions.
Synonymous to welfare and well-
being.
Life-ability of the person. How well people are equipped to cope with the problems of life, fitness
or health.
Life-results
Utility of Life. A good life must be good for something more than
itself, some higher value such as
ecological preservation or cultural
development.
Satisfaction. Inner outcomes of life. It refers to the quality-of-life
in the eye of the beholder. Subjective appreciation of life.
This is commonly referred to by terms such as 'subjective
wellbeing', 'life-satisfaction' and 'happiness' in a limited sense of
the word. Source: Veenhoven (2000, 2010)
Table 2. Four Kinds of Satisfaction
Passing Enduring
Part of Life Pleasure Part-Satisfaction
Life-as-a-whole
Peak Experience
Life-Satisfaction (Happiness)
Source: Veenhoven (1984, 2000, 2010)
Table 3. Comparison of Selected Countries
Life Satisfaction
as Contentment
Over-All Happiness
Real Gross National
Income per Capita (2008)
In US$
Human Development
Index 2010
Non-Income Human
Development Index 2010
Gini Coefficient 2000-2010
Economic Freedom
Index 2006-2010
Norway 8.1 7.53 58,810 0.94 0.954 25.8 68.8Australia 7.9 7.36 38,692 0.94 0.989 35.2 81.68Bulgaria 4.4 3.79 11,139 0.74 0.795 29.2 63.48Brazil 7.6 6.41 10,607 0.70 0.728 55.0 57.12Thailand 6.3 5.88 8,001 0.65 0.683 42.5 63.24Philippines 5.5 4.67 4,002 0.64 0.726 44.0 56.28Indonesia 5.7 4.89 3,957 0.60 0.663 37.6 53.44India 5.5 5.54 3,337 0.52 0.549 36.8 53.68Zimbabwe 2.8 3.48 176 0.14 0.472 50.1 27.82Source: Human Development Report 2010, World Values Survey, Gallop World Poll
Figure 1. Happiness and its Components
Source: Veenhoven (2009)
Global Assessment
Sub-Totals
Information Basis
OVER-ALL HAPPINESS Satisfaction with one’s life-as-a-whole
Hedonic Level of Affect Balance of pleasant and
unpleasant affect
Contentment Perceived realization
of wants
Affective Experience Cognitive Comparison
Table 4. Explanation of Over-all Happiness and its ComponentsConcept Definition Empirical Consequences
Over-all Happiness
The degree and attitude to which an individual judges the overall quality of his life-as-a-whole, drawing on different sources of information, called ‘components’ of happiness.
How well we live up to standards of the good life, how well we feel affectively.
Hedonic level of Affect
Feelings, emotions, moods, with its different dimensions: active–inactive, and, pleasant–unpleasant (‘hedonic tone’).
Assessment is in terms of pleasantness in feelings, emotions, moods.
Does not presume subjective awareness of an average level.
One can feel good most of the time, without being fully aware of that.
Contentment
Evaluate their life with the use of reason and compare life-as-it-is with notions of how they want life-to-be.
Presupposes that the individual has developed some conscious wants and has formed an idea about their realization
Source: Veenhoven (2009)
Table 7. Variables used in the Regression
Life Satisfaction (LS)Over-all Happiness (Life satisfaction as best-worst averaged from 2006 to 2009) and Life satisfaction (contentment, averaged from 2006 to 2009). These indicators were obtained from the World Values Survey
Non-Income HDI (NINCHDI)
Non-Income Human Development Index (HDI) for 2010. This variable captures the effect of the gratification of basic needs to life satisfaction.
Real Gross National Income per Capita (INCOME) and the Inequality of Income
Logarithm of gross national income per capita for 2010, obtained from the UNDP Human Development Report for 2010. The Inequality of Income Variable used is the GINI Coefficient averaged from 2000 to 2010.
Economic Freedom Index (EFI)
Economic Freedom Index averaged from 2006 to 2010. The compounded growth rate of the economic freedom index from 1995 to 2010 shall also be to included to incorporate the effect of sustained levels of economic freedom for some countries, obtained from the 2011 Economic Freedom Index published by the Heritage Foundation, Inc.
Subjective Well-Being (SWB)
Subjective well-being indicators, obtained from the Gallup World Poll and used in the UNDP Human Development Report for 2010, which include the following: percentage of respondents who perceive that there is respect of persons in society, have social support networks and have a purpose in life; standard of living, job, personal health satisfaction and negative experience. Income aspiration variable, hedonic adaptation variable (uses the compounded growth rate of the economic freedom index from 1998 to 2010, and, the life aspiration variables) all which are expected to be positive and significant for high HDI countries
Hypothesis 1. Life satisfaction (contentment) and over-all
happiness can be explained by the gratification of basic needs.
1.00.80.60.40.2
8
6
4
2
12.010.59.07.56.0
8
6
4
Con
tent
men
t
Log(Real GNI per capita)
Ove
r-A
ll H
appi
ness
Non-Income Human Development Index
Matrix Plot of Life Satisfaction (Contentment) and Over-all Happinessversus Log(Real Gross National Income per Capita) and the Non-Income HDI
Hypothesis 2. Life satisfaction (contentment) and over-all happiness increase when other variables
which incorporate affective experience, adjustment of standards, and, the inclusion of another basic
need such as economic freedom, all of which characterize human flourishing, are included.
Table 10. Coefficients of the Regressions on Over-All Happiness and Contentment using all indicators of Human Flourishing
Variable Expected Sign
Happiness as Contentment Over-All Happiness
All Nations
High HDI
Medium to Low
HDI
All Nations
High HDI
Medium to Low
HDI C +/- 0.12ns -2.72ns 2.59ns -3.64*** -6.14*** 0.72ns
Gratification of Basic Needs Log (Real Gross National Income per Capita) + 0.31*** 0.35** -0.04ns 0.35*** 0.27* 0.21**
Non-Income HDI + 1.04** 1.78* 1.58** 0.40ns 0.61ns 1.10** Economic Freedom (2006-2010) +/- -0.003ns -0.018** 0.027* 0.004ns -0.007ns 0.007ns
Growth in Economic Freedom (1998-2010) +/- -0.04ns 0.04ns -0.016ns -0.03ns 0.04ns 0.02ns
Social Construction Gini Coefficient (2000-2010) +/- -0.001ns 0.014* 0.005ns -0.003ns 0.009* 0.002ns
Comparison Income Aspiration +/- -2.03*** -1.50* -3.01*** 1.89*** 3.69*** 0.24ns
Reflected Appraisal Having a Purpose in Life + 0.015** 0.019** 0.003ns 0.01* 0.017*** -0.001ns Presence of Social Support Networks + 0.010** 0.021*** -0.001ns 0.01** 0.016** -0.002ns
Affective Experience Personal Health Satisfaction + -0.002ns -0.01ns 0.012ns 0.007* -0.009ns 0.03***
Job Satisfaction + 0.012** 0.03** 0.002ns 0.005* 0.027** 0.001ns Standard of Living Satisfaction + 0.03*** 0.028*** 0.03** 0.02*** 0.028*** 0.002ns
Negative Experience - -0.004ns -0.018* 0.015ns -0.007ns -0.01* 0.005ns
R2 adjusted
0.85 0.88 0.65 0.86 0.84 0.77 Standard Error of the Regression 0.43 0.34 0.38 0.53 0.42 0.57
Summary of Results
The ability of chosen categories to explain happiness as contentment, that is, more than mere pleasure shows that the desire for happiness is
consistent, follows a logical pattern, and is stable over time, when analyzed from a cross-section of about 80 countries.
Enrichment of Economic Concepts by Going Back to its Roots
• Qualitative variables such as happiness can be explained by economics, using its tools for analysis
• Reason: it has stable qualities because the agents move about life with a life-enduring goal.
• This is nothing more than a need to return to the influence of natural law, via late scholastic thought on the reality of the behavior of the economic agents
Beyond Needs Gratification:
Happiness Economics as
Human FlourishingMain References:
• Barrera, Albino (2001) Modern Catholic Social Documents and Political Economy, Washington DC: Georgetown University Press
• Bruni, Luigino, Pier Luigi Porta, editors (2007) Handbook on the Economics of Happiness Edward Elgar: Cheltenham, UK
• Chafuen, Alejandro (2003) Faith and Liberty: The Economic thought of the Late Scholastics, Lexington Books, USA: Acton Institute
• Enderle, Georges (2010) “A Rich Concept of Wealth Creation Beyond Profit Maximization and Adding Value, chapter 2, Fairness in International Trade, Geoff Moore, Editor, Durham, UK: Springer, pp. 9-26
• Gregg, Samuel (2001). Economic Thinking for the Theologically Minded. Maryland, USA: University Press of America
• Hausman, Daniel M. and Michael S. McPherson (1993). “Taking Ethics Seriously: Economics and Contemporary Moral Philosophy.” Journal of Economic Literature. Volume XXXI (June 1993). pp. 671-731
• Heilbroner, R. L. (1987), ‘Wealth’, in J. Eatwell, M. Milgate and P. Newman (eds.) The New Palgrave: A Dictionary of Economics, Vol. 4 (Macmillan, London), pp. 880–883.• Minkler, Lanse (1999).“The Problem with Utility: Towards a Non-Consequentialist / Utility Theory Synthesis.”
Review of Social Economy. Vol. 57. pp. 4–24• Peil, Jan and Irene van Staveren (2009) Handbook of Economics and Ethics, Cheltenhan, UK: Edward Elgar• Pontifical Council for Justice and Peace (2011) Social and Ethical Aspects of Economics. A Colloquium in the
Vatican. 2nd Edition. Vatican City• Yeungert, Andrew (2003). Boundaries of Technique, Acton Institute, Grand Rapids, Michigan.
Beyond Needs Gratification:Happiness Economics as
Human Flourishing
Jovi C. DacanaySchool of Economics
University of Asia and the Pacific