Does Happiness Improve Welfare Economics a Lot?

Mota, Gabriel Leite

doi:10.1007/978-3-030-15835-4_6

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“…At the end of the day, welfare was framed around the Fundamental Theorems of Welfare Economics, which narrowed it to the Kaldor–Hicks compensation principle and Marshall’s consumer surplus and cost–benefit analysis as the main tools of analysis, and the promotion of gross domestic product per capita (GDP pc) growth as the typical policy advice (see Feldman [2008] and Leite Mota [2019] for details). At the same time, some welfare dimensions remained present in positive economic, even when not explicitly recognized 4…”

Section: Making a Case For Happinessmentioning

confidence: 99%

Unsatisfying ordinalism: The breach through which happiness (re)entered economics

Mota

2022

Regional Science Policy & Practice

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The acceptance of happiness studies within economics was a surprising event. The materialistic and theoretical conception of utility in modern economics deemed any attempt to measure and analyze the subjective dimension of utility unscientific. Nevertheless, some economists were unsatisfied with such preconceptions. In this paper we argue that ordinalism, being an incomplete and inconsistent form of economic analysis of welfare, opened the floor for alternative definitions of welfare and utility. In particular, some economists prone to interdisciplinarity and specialized on topics where welfare issues were more relevant (such as labor or welfare economics), saw in the cardinality of subjective well-being data an opportunity to remedy those problems. The data availability and scientific analysis of happiness from the 1990s onwards, gave credit to the utilization of subjective well-being in economics and paved the way for happiness in economics, which is now a dynamic research topic with empirical findings that challenge standard welfare analysis and policy advice. We conclude this paper with some policy implications and with what happiness has yet to contribute to economics.

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Section: Making a Case For Happinessmentioning

confidence: 99%