Economy of Happiness Course PPTe

The Economics of Happiness
FRANCIS MUNIER
University of Strasbourg France
fmunier@unistra.fr
Room 141
Cloud of relevant words
Psychology
Modernity
Buthan GNH
Economy Paradox of
Progress
Policies Quality of Life
Philosophy
HAPPINESS
Stieglitz/ Sen Report
Individual
Countries
Measure
International
Today, it is not just perfectly legitimate
to pursue happiness, but not being

happy, or at least not seeming to be, is
even a problem to be avoided.
To show sadness or a negative attitude
is a sign of social failure.
INTRODUCTION
Easterlin Paradox (1974)
Does economic growth improve the human lot? Some empirical evidence
as heralding the beginning of this field of research
INTRODUCTION
INTRODUCTION
We live in a favored age and yet we do
not feel favored.

Gregg Easterbrook (2003) The
Progress Paradox: How Life Gets
Better While People Feel Worse,
Random House; 1st edition
Why economic progress, both of which
justify themselves on the grounds that

they produce the greatest happiness for
the greatest number, leave so much
dissatisfaction in their wake ?
Ruut Veenhoven (1993) Happiness

in Nations, Subjective appreciation
of life in 56 nations 1946-1992,
Erasmus University Rotterdam
INTRODUCTION
Why is happiness
important?
Difference between poor and
rich people
Difference between young
and old people
Difference between men and
women
Difference between
nationals and foreigners
INTRODUCTION
It is then important to know
how and why happiness has

changed over time.
In this way, we are able also
to give some answers about
the decline (or not) of
happiness
Is it true that people get
more and more unhappy
(pessimists) or do people get
happier all the time
(optimists claim) ?
Increase of wealth (even
Real GDP of capita) versus
happiness
INTRODUCTION
Is it true that people in
underdeveloped countries
are quite happy despite their
low real per capita income?
Or is this view just a
romantic notion that does

not take into account the
hardship imposed by low
income.
Cross-country comparison
of subjective happiness
INTRODUCTION
Economy of Happiness leads to
many central questions :
How important is wealth to
happiness ?
The rate of unemployment?
The rate of economic growth?
Job satisfaction?
Leisure time?
How important is marriage?
Parenthood?
Health?
Democratic institutions?
Social safety nets ?
INTRODUCTION
How do various factors such as

economic growth, unemployment
and inflation, as well as
institutional variables, affect
individual well-being?
Are people who buy new products

happier than the others who are
not able / who do not want to buy
these new products?
Can we find a correlation between

happiness and GDP?
Are people with a higher income

happier than those who earn less?
INTRODUCTION
It may appear obvious to
ask these kinds of

questions, but until
recently economists, for
the most part, ignored
them.
Therefore, todays interest
in this area constitutes a

real revolution in the field
of economics
COURSE SCHEDULE
I. Some glimpses of Economy of Happiness
a. Salient facts on happiness

b. GDP and happiness
c. How does income affect happiness?
d. How does unemployment and inflation
affect happiness?
COURSE SCHEDULE
II. International Comparisons
a. Example of rankings
b. The better life index
c. How to interpret these international
comparisons of happiness?
COURSE SCHEDULE
III. Happiness and Creativity
a. Creativity, Growth, nudge : the case of

Shanghai
b. Creative Class, Post-modernism and
happiness of Nations
Test - Topic of report
Final test : (50% of the grade)
Report and oral presentation around 10 pages (guideline) : 50%
Some glimpses of Economy of Happiness

Salient facts on happiness
The big question: what is happiness ?

As old as mankind itself
Philosophy try to define what a good and happy life is
Eudaimonia versus hedonia

Eudaimonism / hedonism (homo
oeconomicus )

Differences between Hedonic and Eudaimonic well-
being
Life satisfaction (Hedonia) versus Personal growth

(eudaimonia)
Happiness (Hedonia) versus Inspiration (Eudaimonia)
Pleasure (Hedonia) versus Good life (Eudaimonia)
Joy (Hedonia) versus Engagement, interest, flow (Eudaimonia)

HEDONIA
Focuses on Happiness (Kahneman, Diener &
Schwarz, 1999)
Well-being defined by pleasure attainment and pain avoidance

Subjective well-being consist of three dimensions
Life satisfaction
Presence of positive moods
Absence of negative moods

EUDAIMONIA
Well-being defined degree by which a person is fully

functioning
To lives in accordance to ones daimons (Socrates)
Happiness good life is more than pleasure

Socrates : Eudaimonia (being
good, happy life)

Happiness is a virtuous life
Happiness can not exist
without a fair conduct of life.
knowledge are guides to
identify what is good.
The happier lives therefore is
linked to wisdom.
Plato : true happiness is the
contemplation of eternal ideas.
Be friends with yourself

Aristotle : Health, wealth, beauty,
virtuous life and power are the

steps needed to achieve a happy
life
Friendship is essential to a happy
life
Epicure : Teleological conception
of happiness.
Only necessary desires lead to
happiness (drinking, eating).
Epictete : We must break free of
the passions to achieve happiness.
Do not expect that events happen
as you wish, decide to try what
happens and you are happy.

Montaigne : Looking for
pleasure, disdain of sadness.

The search for happiness is to
come to accept reality and
cultivate vivre propos.
Spinoza : Breaking free of the
passions. Development of the
well-being through knowledge
Schopenhauer : Individual is
subjected to the tyranny of the
will. Lose themselves in
contemplation and asceticism
for inner peace

Budhism, Confucianism,
Islamism, taoism, etc.

Psychologists try to understand
what particulars ingredients

and circumstances make people
happy or unhappy
Positive psychology is a recent
branch of psychology Positive

psychologists seek "to find and
nurture genius and talent", and
"to make normal life more
fulfilling", not simply to treat
mental illness.

There is no consensus about what
happiness is
It means different things for
different people
Everyone can define for himself
what is happiness
May be it is the ultimate goal in life
Some authors disagree about
happiness being the ultimate goal

of human life
it is just one ingredient in the
recipe for a good life
For example, different ultimate
goals have been distinguished with
no possibility to merge and or to be
subordinate.

Subjective well-being (another
term of happiness)
Human development
(including virtue)
Justice
Companionship
Freedom
Others consider that a large set
of factors is important in
addition to happiness
Trust, self-esteem, absence of
pain, satisfaction with ones
work, family life and marriage

In addition with these outcomes,
procedural aspects may play a

significant role
Most person derive great pleasure
from engaging, challenging
activities.
The emphasis on process rather
than outcomes has been called the

flow aspect of life (theory of flow
by mihaly csikszentmihalyi)
http://www.ted.com/talks/mihaly
_csikszentmihalyi_on_flow#

Because happiness is an
elusive concept, it makes

little sense to proceed by
trying to define what
happiness is
Is it may be more relevant
to ask the individuals how
happy they feel
themselves to be
They are the best jugdes of
when they are happy or
unhappy

Concepts of Happiness
It is also useful to look at two polar concepts of
happiness: subjective and objective happiness


Explaining the Psychological Mechanisms Producing
Happiness
Subjective well-being is an attitute consisting of the
two basic aspects of cognition and affect.
Affect : mood and emotionsinstant evaluation of
the events that occur in their lives.
Cognitive : rational or intellectual aspects.
It involves a component of judgment and
comparison

Subjective well-being, happiness, satisfaction
Physiological and neurobiological indicators : brain waves
but of course no practical indicators

Observed social behavior : Happy person acts more as high
activity level, outgoing actions, friendliness
Non verbal behavior : relationship between frequent
smiling in social interactions or enthusiastic body of
movements and happiness
but some actions is sometimes undertaken by unhappy
persons
difficult to judge a persons well being.

Happiness is thus not given and immutable, but is
constructed within the person concerned and largely

depends on the social environment
Even that genes : 60%

The determinants of happiness
Personality factors : self-esteem, personal control, optimism,
Socio-demographic factors: age, gender, marital status,
education
Economic factors : individual and aggregate income,
unemployment, inflation
Contextual and situational factors : working conditions, stress
involved at the workplace, interpersonal relations with
colleagues, relatives, friends, marriage partner, living
conditions, health
Institutional factors : the rights, freedom, etc.

There are four psychological
processes:
Adaptation : new
circumstances and need to
adjust their subjective level
of well-being
Hedonic adaptation reduces
individuals responsiveness
to repeated or continued
stimulus
The case of people who win
the lottery for exemple
Hedonic Treadmill

Aspiration : People evaluate their
situation with regard to an

aspiration level that is formed by
their hopes and expectations
Usually, aspiration levels are closely
correlated with current or past
attainments.
Social comparison : People compare
their positions with those of relevant
other persons
Importance of the relative income
Depend also to the environnement :
people are less happy when they
dont have a job, but the
unhappiness decreases when more
people are in the same position

Coping : People have a strong capacity to overcome unfortunate
events.
For exemple the case of paraplegics after an accident
(controversies)
Experimental situations show that people have proved that they
are unable to correctly recall pain suffered in the past

People tend to disregard the extent and speed with which they
adjust to new situations
Self-binding

Inverse causation :
Whether people are happy or unhappy has a
large effect on how they live :
Happier persons are more successful in the labor

marketfind a job more easilyand progress more
quickly in their careers
Happier persons find more easily a partnerless exposed
to loneliness
Happier persons are more cooperativehelp others
It is extremely difficult in many cases to identify the

direction of causation.

Subjective well-being depends on the prevaling
economic conditions
Economy with unemployment, inflation, depressed
lead to less happiness for people
This is one of the reason it is important to know the
effects of economic conditions in order to develop
relevant policies.
See also if some economic determinants are in
conflict with each otherthis is in particular the case
with inflation and unemployment

Happiness also differ among countries because their
political and social lives are governed by different

institutions
Institutions fundamentally shape how a society is
organized.
Institutions : constitutions, politics, market, government

bureaucracy
Rights to individuals, basic human rights, vote, etc.

Example of the
measurement of subjective
happiness via a global selfreports.
1534 persons living in US in
1995.
They were asked : All
things considered, how
satisfied are you with your
life as a whole these days?
Respondents had to indicate
on a scale ranging form 1
(dissatisfied) to 10 (satisfied)

Another concept of
happiness like
experience sampling
measures : ascertain
moods, emotions, and
others feeling at random
moments in individuals
everydays lives

Measure of SWB - Happiness
by survey
Happiness / Life Satisfaction

Happiness question: If you were to consider your
life in
general these days, how happy or unhappy would
you say
you are, on the whole?
1. Not at all happy; 2. Not very happy; 3. Fairly

happy; 4. Very
happy.
Life Satisfaction question: All things considered,
how
satisfied are you with your life as a whole these days?
1(dissatisfied) 10 (very satisfied).

Ladder question (Cantrill): Imagine a 10-step
ladder. The
lowest rung (0) represents the worst possible life for
you, and
the highest step (10), the best possible life for you. On
which
step are you today?"

The Most Widely Used Surveys
International Surveys
World Values Survey (97 countries, 1981-)
European Social Survey (32 countries, 2002-)
Eurobarometer
Gallup World Poll
National Household Surveys
General Social Survey (USA, 1972-)
German Socio-Economic Panel Study (GSOEP, 1984-),
British Household Panel Survey (BHPS, 1996-),
Russian Longitudinal Monitoring Survey (RLMS, 1994-)
Australian Household Panel Survey (HILDA, 2001-)
Happy Index http://survey.happyplanetindex.org/

Surveys : Self-reported happiness has turned out to be
the best indicator of happiness.

The World Values Survey (WVS) grew out of the European Values
Survey (EVS) group.

It surveys a population sample from over 40 countries every five
years.
It includes the questions All things considered, how satisfied are
you with your life as a whole nowadays?
(on a scale of 1 Dissatisfied to 10 Satisfied) and Taken all things
together, would you say you are (1 Very happy, 2 Quite
happy, 3 Not very happy, 4 Not at all happy).

The European Values Survey (EVS) is a nationally
representative cross-sectional survey of over 20

European countries undertaken every 9 years since
1981.
It includes the questions All things considered, how
satisfied are you with your life as a whole nowadays?
(on a scale of 1Dissatisfied to 10 Satisfied) and Taken
all things together, would you say you are (1 Very
happy, 2 Quite happy, 3 Not very happy, 4 Not at all
happy).

The Eurobarometer is a survey of 300 000 people in
12 European countries.
Interviews are one-to-one in peoples homes and
questions include
On the whole, are you very satisfied, fairly satisfied,
not very satisfied or not at all satisfied with the life
you lead?

The Gallup World Poll is a worldwide survey which
has used Cantrils ladder as a question on

satisfaction with life: Please imagine a ladder, with
steps numbered from 0 at the bottom to 10 at the
top.
The top of the ladder represents the best possible life
for you and the bottom of the ladder represents the
worst possible life for you. On which step of the
ladder would you say you personally feel you stand
at this time?

The US General Social Survey (GSS) has surveyed a
sample of 30 000 Americans since 1972, asking the

question
Taken all together, how would you say things are
these days? Would you say you are ? (Very
happy=3, Pretty happy=2, Not too happy=1).

The International Social Survey Program (ISSP) is an
annual program of cross-national collaboration on

surveys covering topics important for social science
research.
It covers 41 member countries and includes the
question
If you were to consider your life in general these
days, how happy or unhappy would you say you are,
on the whole? (on the scale: 4 very happy, 3 fairly
happy, 2 not very happy and 1 not at all happy).

The European Social Survey (ESS) is an academically-driven
survey which collects data in over 20 European countries.

In the core questionnaire module it asks the question All things
considered, how satisfied are you with your life as a whole
nowadays? Please answer using this card, where 0 means
extremely dissatisfied and 10 means extremely satisfied and
Taking all things together, how happy would you say you are?
(on a scale of 010).
In 2006/2007, it included a well-being module where it asked
over 50 detailed questions about components of well-being,
including How much of the time during the past week were you
happy? (on a scale of 14).

The New Democracies Barometer uses a sample of
1000 people from Central and Eastern European

countries to see how attitudes and behavior change
as people gain more experience of democracies.
The German Socio-Economic Panel (GSOEP) is
household panel survey, in which all members of the
household are asked to participate in annual face-toface interviews. There are over 24 000 respondents
who have participated in at least one of the 24 waves.

The British Household Panel Survey (BHPS) (now called
Understanding Society) began in 1991 and follows the same

representative sample of individuals over time.
It is household-based, and every adult member of each
sampled household is interviewed. Since its beginnings, it
has included the question
How satisfied are you with your life overall? (response
scale of 1 not satisfied at all to 7 completely satisfied) and
Would you say that you are more satisfied with life, less
satisfied, or feel about the same you did a year ago?

Measures
Life satisfaction is the most
commonly used subjective

measure of well-being in the
literature.
The usual wording for the life
satisfaction question is as follows:
All things considered, how
satisfied are you with your life as
a whole these days? Please give a
score of 0 to 10 where 0 means
extremely dissatisfied and 10
means extremely satisfied.
However, it is sometimes worded
in a slightly different way.

Overall happiness. The World Values Survey
question wording for overall happiness is: Taking all

things together, would you say you are: 1 Very
happy, 2 Quite happy, 3 Not very happy, 4 Not at
all happy?
Happiness in the past. The ESS, Gallup World Poll
and the UK Office for National Statistics all ask
questions about how happy respondents have felt
over some period in the recent past, most commonly
yesterday or in the past week.

Cantrils Ladder, also known as Cantrils Self-
Anchoring Scale, asks respondents to

Imagine a ladder, with steps numbered from 0 at
the bottom to 10 at the top. The top of the ladder
represents the best possible life for you and the
bottom of the ladder represents the worst possible
life for you. It then asks: On which step of the ladder
would you say you personally feel you stand at this
time?

The Warwick-Edinburgh Mental Well-being Scale (WEMWBS) is
a 14-item scale specifically developed to capture psychological

well-being.
It is designed to measure both hedonic and eudaimonic aspects
of positive mental well-being and enquires about how people
have been feeling and functioning over the past two weeks,
obtaining a single total score.
There is also a shortened version, known as the S-WEMWBS,
which consists of seven items and which has been shown to have
good psychometric properties as a measure of a single well-being
factor

The Centre for Epidemiological Studies Depression
(CES-D) Scale measures current levels of depression,

focusing mainly on the affective component, and
includes positive as well as negative items.
The Satisfaction with Life scale is a short five-item
instrument designed to measure cognitive judgments

of satisfaction with one's life.

The General Health Questionnaire (GHQ) was
developed as a screening instrument to detect

psychiatric disorders in community settings and
non-psychiatric clinical settings.
It asks several questions on psychological well-being
and, from these, constructs a score. For the purpose
of well-being research, the GHQ scores are inverted
so that a high score represents high well-being
(rather than as a measure of depression, which is the
primary use for which the scale was designed).

Well-being research often uses concept of domain
satisfaction as a means of assessing satisfaction with

different areas of their lives, such as their work,
family life, or social life.
Here a distinction is drawn between well-being from
life as a whole, and the well-being associated with a

single area of life.

The Day Reconstruction Method (DRM) instructs
respondents to write a diary about yesterday.

Within this they evaluate episodes of about an hour
long, in terms of emotions felt (e.g. impatient for it to
end, happy, frustrated/annoyed, depressed/blue,
worried/anxious, enjoying myself, tired, stressed) on
a scale of 0 not at all to 6 very much.
The number of negative time episodes during an
entire day is used to construct a U-Index
(Kahneman et al., 2004a).
Kroll, Christian , Pokutta, Sebastian

Just a perfect day? Developing a happiness optimised day schedule Volume 34, February
2013, Pages 210217, Journal of Economic Psychology.

GDP and happiness
Measuring Well-Being Beyond GDP
Should income per capita really be the target of public policy
Is it a good proxy of wellbeing?
Or an imperfect measure?
quality of life, Capabilties, freedom of choice, equal opportunities, etc.
This meets the discussion about the measures of well-being
e.g. the Sen, Stiglitz Report for President Sarkoy (2009)
Answer this question : using Subjective Well-Being data

GDP and happiness

GDP and happiness

GDP and happiness
It is important to identify the limits of GDP as an indicator of economic
performance and social progress

In the information society, access to data, including statistical data, is
much easier.
More and more people look at statistics to be better informed or to
make decisions (theory of decision, rate of unemployment each month,
)
To respond to the growing demand for information, the supply of
statistics has also increased considerably, covering new domains and
phenomena

GDP and happiness
What we measure affects what we do; and if our measurements
or/and interpretation are flawed, decisions may be distorted.

However, there often seems to be a distance between standard
measures of important socio economic variables like economic
growth, inflation, unemployment, etc. and widespread
perceptions.
The standard measures may suggest, for instance that there is
less inflation (it is case with Euro) or more growth than
individuals perceive to be the case,
and the gap is so large and so universal that it cannot be
explained by reference to money illusion or to human psychology

GDP and happiness
In some countries, this gap has undermined
confidence in official statistics (for example, in

France and in the United Kingdom. only one third of
citizens trust official figures),
http://www.cepremap.ens.fr/depot/opus/OPUS09.p
df
with a clear impact on the way in which public
discourse about the conditions of the economy and
necessary policies takes place.

GDP and happiness
There may be several explanations for the gap between the
statistical measurement of socio-economic phenomena and

citizen perception of the same phenomena:
The statistical concepts may be correct, but the measurement
process may be imperfect or the opposite ?
In many cases, there are debates about what are the right
concepts, and the appropriate use of different concepts.
When there are large changes in inequality (more generally a
change in income distribution) gross domestic product (GDP)
or any other aggregate computed per capita may not provide
an accurate assessment of the situation in which most people
find themselves

GDP and happiness
If inequality increases enough relative to the increase
in average per capita GDP, most people can be worse

off even though average income is increasing
The commonly used statistics may not be capturing
some phenomena, which have an increasing impact
on the well-being of citizens.
For example, traffic jams may increase GDP as a
result of the increased use of gasoline, but obviously
not the quality of life.

GDP and happiness
We are now living one of the worst financial, economic and social crises
in post-war history.
One of the reasons why the crisis took many by surprise is that our
measurement system failed us and/or market participants and

government officials were not focusing on the right set of statistical
indicators.
Neither the private nor the public accounting systems were able to
deliver an early warning, and did not alert that the seemingly bright
growth performance of the world economy between 2004 and 2007
may have been achieved at the expense of future growth.
It is also clear that some of the performance was a mirage, profits that
were based on prices that had been inflated by a bubble.

GDP and happiness
Current well-being has to do with both economic
resources, such as income,

and with non-economic aspects of peoples life (what
they do and what they can do, how they feel, and the
natural environment they live in).
Whether these levels of well-being can be sustained
over time depends on whether stocks of capital that
matter for our lives (natural, physical, human, social)
are passed on to future generations.

GDP and happiness
Need to adapt the system of measurement of
economic activity to better reflect the structural

changes which have characterized the evolution of
modern economies.
In effect, the growing share of services and the
production of increasingly complex products make

the measurement of output and economic
performance more difficult than in the past.

GDP and happiness
There are now many products whose quality is complex, multi-
dimensional and subject to rapid change.

This is obvious for goods, like cars, computers, washing machines, but
is even true for services, such as medical services, educational services,
information and communication technologies, research activities and
financial services.
In some countries and some sectors, increasing output is more a
matter of an increase in the quality of goods produced and consumed
than in the quantity.
Capturing quality change is a challenge, yet this is vital to measuring
real income and real consumption, some of the key determinants of
peoples material well-being (hedonic price).
Under-estimating quality improvements is equivalent to overestimating the rate of inflation, and therefore to under-estimating real
income.
The opposite is true when quality improvements are overstated.

GDP and happiness
Governments play an important part in todays
economies.
They provide services of a collective nature, such as
security, and of a more individual nature, such as
medical services and education.
The mix between private and public provision of
individual services varies significantly across
countries and over time.

GDP and happiness
Beyond the contribution of collective services to
citizens living standards, individual services,

particularly education, medical services, public
housing or public sports facilities, are almost
certainly valued positively by citizens.
These services tend to be large in scale, and have
increased considerably since World War II, but, in
many cases, they remain badly measured.

GDP and happiness
Traditionally, measures have been based on the inputs used to
produce these services (such as the number of doctors) rather

than on the actual outputs produced (such as the number of
particular medical treatments).
Making adjustments for quality changes is even more difficult.
Because outputs are taken to move in tandem with inputs
productivity change in the provision of these services is
ignored.
It follows that if there is positive (negative) productivity
change in the public sector, our measures under (over)estimate economic growth and real income.
For a satisfactory measure of economic performance and
living standards it is thus important to come to grips with
measuring government output.

GDP and happiness
Recommendation 1: When evaluating material well-
being, look at income and consumption rather than

production
Recommendation 2: Emphasize the household
perspective
Recommendation 3: Consider income and
consumption jointly with wealth
Recommendation 4: Give more prominence to the
distribution of income, consumption and wealth
Recommendation 5: Broaden income measures to
non-market activities

GDP and happiness
Key dimension should be taken into account. At least in
principle, these dimensions should be considered

simultaneously:
i. Material living standards (income, consumption and
wealth);
ii. Health;
iii. Education;
iv. Personal activities including work
v. Political voice and governance;
vi. Social connections and relationships;
vii. Environment (present and future conditions);
viii. Insecurity, of an economic as well as a physical nature.

GDP and happiness
Recommendation 6: Quality of life depends on peoples objective
conditions and capabilities.

Recommendation 7: Quality-of-life indicators in all the dimensions
covered should assess inequalities in a comprehensive way
Recommendation 8: Surveys should be designed to assess the links
between various quality of-life domains for each person, and this
information should be used when designing policies in various fields
Recommendation 9: Statistical offices should provide the information
needed to aggregate across quality-of-life dimensions, allowing the
construction of different indexes
Recommendation 10: Measures of both objective and subjective wellbeing provide key information about peoples quality of life.

How does income affect happiness?
For most of economists, higher income leads to
higher happiness
Expands the opportunity set
more goods and services
If few people are not interested
they have the freedom to dispose of any unwanted
surplus

For psychologists it is not so obvious

Case to a winner of the lottery
The level of happiness decrease day after day in
order to reach the initial level before the lottery

Most of people quit their job and lose relationship,
and a sense of accomplishment

But some economists do not subscribe to the idea
that higher income produces higher happiness

Galbraith (The Affluent Society)pointet out the
limited use of higher private income while the public

sector is starving
Easterlin (1974), Scitovsky (1976)

Are people in rich countries happier than those in
poor countries ?
Does an increase in income over time raise
happiness ?
Are the people with high income in a country
happier than those with low income ?

The Easterlin paradox

Paradoxical relationship between income growth and
subjective happiness:
Within country
Across countries
Over time at the individual level
Over time in average across countries
BETSEY STEVENSON & JUSTIN WOLFERS Economic Growth
and Subjective Well-Being: Reassessing the Easterlin Paradox,

Brookings Papers on Economic Activity, Spring 2008

Income and happiness between countries

Evidence that, on average, persons living in rich
countries are happier than those living in poor

countries
Above 10 000 dollars, there is no sizable correlation
betwen wealth and satisfaction with life.

Moderate positive correlation with average real
income per capita

In general, people in rich countries are happier than
are those in poor countries.
This positive relationship is especially strong with
countries below a GDP per capita of 10 000 dollars.
But for the rich countries, it does not seem that
higher per capita income has any effect on happiness
The relationship between happiness and per capita
income across countries is thus complex.

Nevertheless, the relationship between income and
happiness is of limited value.

The positive correlation may be produced by other
factors than income as such :
Countries with higher income tend to have more
stable democraties than poor countries.
The more developed democratic institutions are, the
more satisfied the citizens are

Others aspects positively correlated with higher
income :
secure human rights,

average health,
equality of distribution of income (normally)
See also the inverse causationPeople who are happy are
more inclined to work hard and to earn more.
More creative and enterprising leading to higher income.

But at then end, there is substantial evidence that it
is indeed income that produces subjective wellbeing, at least for countries below certain threshold
of wealth
All essential social indicators are more positive in
nation of higher income
People enjoy more and better quality food, cleaner
drinking water, better education, better health
services, higher longevety, more parity between
sexes, more respect for human rights

Conclusion : across Nation, income and happiness go
together
and higher income increases peoples subjective well
being in poor countries
The notion that people in poor countries are happier

because they live under natural an less stressful
conditions can be considered as a myth.

Income and happiness over time

Several scholars have identified a striking and
curious relationship :
Per capita income in US has risen sharply in recent
decades,
but the proportion of persons considering
themselves to be very happy has fallen over the same
period


This result is surprising because it is contradictory to
the results presented just before that people in richer

countries report to being happier
How to explain ?
Positive correlation between happiness and wealth
is hidden due to changes in the composition of the
population
The meaning of happiness may have changed over
time

Perhaps 55 years ago, people were more inclined to
state that they were very happy.

If it is the case, this figure is simply misleading there
is no reason to ponder it.
A different reaction is to take the figure as an
indication that money does not buy happiness or

that there is more to subjective well being than just
income

People are constantly drawing comparisons from the
past and from their expectations of the future

We notice and react to deviations from aspirations
levels that depend on our own, or other peoples
experiences in the past
A rise in income initially provides a surge of satisfaction

But after some time we get accustomed to it and are not
happier than before
Especially relevant if income serves to buy consumer
goods

GDP and happiness

Additional materials goods and services initially
provide extra pleasure but it is always only transitory

This is a process that reduces the hedonic effects of a
constant or repeated stimulus is called adaptation
It is this process of hedonic adaptation that makes
people strive for ever higher aspirations
Four important consequences :

The upward adjustement of expectations induces
human beings to accomplish more and more

They are never satisfied / Case of nobel prices
Wants are insatiable
The more one gets, more one wants
Greater opportunities (provided by higher income)
do not always raise happiness
Provide more aspirations

Most people think that they felt less happy in the
past but expect to be more happy in the future

This asymmetry can be explained by changing
aspirations
Relation between happiness and income according
to the aspirations


Income between persons

The effects on happiness of income can also be
assessed by comparing people with a different

income at a particular point in time who live in the
same country.
At the first stage, people with higher income have
more opportunities to achieve whatever they desire :
buy more material goods and services
Higher income provides more utility

Conversely, the poor are unhappy

In a given country,
richer individuals are

happier and more
satisfied with their
lives

OLS Estimate of
Happiness in
USA(General Social
Survey, 2006)
Happiness = 0,2
log(income). Individuals
aged 25-65, earning
more than 5000$.
Happiness and log

household income American General Social Survey (Stevenson and Wolfers, 2008)

In every representative national survey ever done, a

significant bivariate relationship between happiness and
income has been found (Easterlin 2005)
Western developed countries: German Socio-Economic Panel (GSOEP), British
Household Panel Survey (BHPS), Swiss household panel, Australian household
survey (HILDA), General Social Survey (America), Netherlands, Denmark.
Transition countries: Albania, Bulgaria, Latvia, Romania Russia, Estonia,
Lithuania, Hungary, Belarus, Poland, Ukraine, Life in Transition Survey (LITS,
2006)....
Asia: China, India, Shanghai, South Korea.
Africa and Middle-East: Ethiopia, Nigeria, Peru, South-Africa (SALDRU),
Tanzania, Turkey
Latin America: Argentina, Brazil, Chile Mexico, Venezuela.
International surveys: World Values Survey (1981- 2008, 5 waves, 105
countries), International Social Survey Program (101 countries), Gallup World
Poll (2006, 105 countries), Latino Barometer (18 countries), European Social
Survey (25 countries), European Values Survey, Euro-barometer.

The research on happiness brings some
differentiated results
There are many reasons why income does not buy happiness
People are really seeking nonmaterials goods such as

personal fulfillment or the meaning of life and are
disappointed when materials things fail to provide them
(Dittmar, 1992)

Happiness seems to be priceless , that is cannot
be achieved by material factors

But the empirical evidence shows that the general
result is that happiness and income are indeed

positively related
But there is a noticeable effect of income on
happiness (correlation is 0.2 in US)


Others studies taking into account a large number of
factors, such age, gender, education, and health, also

find a positive effect, but the effect is smaller.
Others economic factors as inflation and
unemployment exert a greater influence
In fact, the relationship betwen income and
happiness is curvilinear


At low levels of incomes, a rise in income strongly
raises well-being,
but once an annual income of about 15 000 dollars
has been reached
a rise in income has a smaller effect on happiness
Higher income is still experienced as raising well-
being, but at a lower rate

The case of Switzerland :


This is of course different in poor countries

Calcutta : the correlation is 0.45
Relative income
As pointed out, there are many reasons why higher income

does not simply translate into higher happiness
People compare themselves to other persons

It is not the absolute level of income that matters
most, but rathers ones position relative to other

persons

Easterlin (1974, 1995) used the concept of aspirations
as a frame of reference to explain happiness
He acknowledges that people with higher income are, on

average, happier,
but raising everybodys income does not increase everybodys
happiness, because, in comparison to others, income has not
improved
See also Thorstein Veblen (1889): He coined the term
conspicuous consumption to describe the state of

wanting to impress other people

The hypothesis of relative income has been
formulated by Duesenberry (1949)
The wealthier people impose a negative external effect on the

poorest peoplebut not vice-versa
Importance of the equality for the incomes distribution.

Role of relative social status by calling attention to
positional goods, which, by definition, cannot be

augmented because they solely rely on not being available
to others
For example, only rich people will ever be able to afford
servants
The production of positional goods in the form of luxuries,
such as exceedingly expensise watches or yachts, is a waste
of productive resources, as overall happiness is thereby
decreased rather than increased.
Relational goods

Conclusion
Paradoxical
relationship between income

growth and subjective happiness: Within
country, Across countries, Over time at the
individual level, Over time in average across
countries
Money does not buy but it contribute
Not so easy, the debate is still important
Salient facts : Happiness Unemployment Inflation

How does unemployment affect happiness ?
Two approaches
Keynes and the new classical macroeconomics
Involuntary versus Voluntary

Personal unemployment
Substantial negative effect

on the happiness
Refer to the pure effect

of being unemployed
The drop in happiness

may,
be attributed
to psychological
and social factors

How does unemployment affect Happiness ?
The main empirical researches based on happiness differ

with the view held by the new classical
macroeconomists
For those affected, being made redundant is considered
to be a most unfortunate event, creating major
unhappiness

How does unemployment affect Happiness ?
Unhappy people
Do not perform well
Therefore are laid off

General
unemployment
Fear being hit

by unemployment
Feel bad about

the unfortunate
fate
of those
unemployed
Contributions
and taxes
that is likely
to happen
in the future
Fear that crime

and social unease
will increase
Threat of
violent protests

Unemployment causes major unhappiness

Contrast with the view that
unemployment is voluntary
Unemployment needs
to be seen
in a wider
context
The notion that work produces

disutility is rejected
It lowers the happiness of

those people
lose their job
and, also causes distress
to employed people.

How does inflation affect happiness?
Wage earners, as well as owners of nominal assets such as

cash or bonds, risk being the losers.
Economics starts with this distinction between anticipated

and unanticipated inflationwhen analyzing how inflation
affects individuals

How does inflation affect happiness?
No relationship
between average
happiness and inflation rate
HAPPINESS
Cost
of inflation
Psychic effect
of inflation

Trade-offs between Inflation and Unemployment
How much, on average, must a country

reduce its inflation in order to tolerate a
rise of one point in unemployment ?

Trade-offs between Inflation and Unemployment
The so-called misery index :
If unemployment rises by 5 points, the

inflation rate must decrease by 8.5 points
to keep the population equally satisfied.
Our research - database

World Database of Happiness
DATABASE
Macroeconomic variables as
the 'GDP per capita' and
the rate of growth rate are
from 'The Groningen Growth and
Development Center database'
The series
of inflation and unemployment
rates are extracted from OECD
Our research - database

How satisfied are you with the life you lead? Very
satisfied, fairly satisfied, not very satisfied or
not at all satisfied.
The variable LS measures the average level of life satisfaction in a
given country at time t.
Example: i =France, t =2010
not at all
not very
fairly
very
satisfied
satisfied
satisfied
satisfied
Codage
For N=1020
4%
13%
63%
20%
Question
variable
LS it = 2.99
0.04 1 + 0.13 2+0.63 3+0.20 4=2.99
Our research - model

LS it 0 1 it 2 u it i t vit
where vit is a random term assumed independently and identically distributed, with
mean zero and variance v2 . The specification rests upon the hypothesis according to
which the impact of the macroeconomic variables on the level of life satisfaction is
the same for all countries (that is, the economies behaviour is homogeneous). In
practice, the heterogeneity of behavior may be taken into account by the specific
effects i and t
Our research - Results

Inflation rate has a minor impact on life
satisfaction
Unemployment rate effect proves to be very

significant

The influence of inflation and unemployment rates is
not the same according to countries.
We observe that only the French case show that both
the two variables act significantly on the life

satisfaction.

Table 2: Predicting individual estimations: LS = f(Inflation, Unemployment)
Dependent variable: life satisfaction UE12, 1985-2009 (T=25, N=12)
Random Model
Country
Fixed Model
Inflation
Unemployment
Inflation
Unemployment
0.0046
-0.0314
0.0103
-0.0393 ***
-0.0487
-0.0063
-0.0652 ***
-0.0039
-0.0486
-0.0396
-0.0593 ***
-0.0457 ***
Ireland
Italy
-0.0105
-0.0150
-0.0105
-0.0151 ***
-0.0124
0.0049
-0.0169
0.0130
Luxembourg
Netherlands
0.0081
0.0091
0.0139
0.0198 **
-0.0016
-0.0171
0.0027
-0.0167 ***
United Kingdom
Greece
-0.0072
-0.0117
-0.0074
-0.0112
-0.0058
-0.0184
-0.0043
-0.0088
Portugal
Spain
0.0063
-0.0328
0.0065
-0.0344 ***
0.0112
-0.0188
0.0128 *
-0.0192 ***
Belgium
Denmark
France
0.0113
-0.0275
0.0146
Germany
Notes: (***), (**) and (*) significance at 1%, 5% and 10% levels respectively.
-0.0293 ***
Our research - Some perspectives

Life Satisfaction and the Philips Curve
Estimation results: Phillips curve and life satisfaction specification
EU12, 1985-2009 (T=25, N=12), Estimation method : random eeffect
(1)
Constant
Initial inflation rate
Unemployment rate
(2)
(3)
Phillips curve
Life satisfaction
2.6990 ***
3.4442 ***
i0
0.3556 ***
-0.0377 ***
u it
-0.2301 ***
-0.0143 ***
Speed of nominal convergence

Implied inflation rate effect
4.1%
Implied unemployment rate effect
-0.1060
-0.0389

The results show that the effect of inflation included
the Philips Curve is now significant
The effect of rising unemployment (-3.89%) is offset by
the interactive effect of lower inflation (-0.2301) and
its effect on life satisfaction (-0.1060).
This implies that the increase in the unemployment
rate does a drop of 1.43% for life satisfaction.

The role of the Central Bank
Difference between Germany
and France
OKUN law the rate of growth
International Comparisons
Example of rankings
Happy planet index

https://www.youtube.com/watch?
v=M1o3FS0awtk
Example of rankings
The better life index
How to interpret these international
Comparability across Nations

Cultural bias in reports of happiness.
American Citizens have a tendency to claim that they
are (very) happy because happiness is positevely

valued in that society
The French have the opposite bias Happy people
are idiots (C. De Gaulle)
The Japanese are said to be reluctant to profess to
being very happy because of the social custom of
modesty.
Of course because of economic and political factors
but also because of culture, values, civilization

maybe.
R. Inglehart WVS.
Sacred and Secular: Religion and Politics
Worldwide Inglehart's 2004 book with Pippa

Norris
Religiosity persists most strongly among vulnerable
populations, especially those in poorer nations and in failed

states, facing personal survival-threatening risks.
Exposure to physical, societal and personal risks drives
religiosity.
Conversely, a systematic erosion of traditional religious
practices, values and beliefs may have occurred among the
more prosperous strata in rich nations.
But at the same time, a growing proportion of the
populationin both rich and poor countriesspends

time thinking about the meaning and purpose of life.
It is argued that in developed countries, the
established churches are losing their ability to tell

people how to live their lives, but spiritual concerns,
broadly defined, may be becoming increasingly
important.
Secularization is the transformation of a society
from close identification with religious values and

institutions toward nonreligious values and secular
institutions.
The secularization thesis refers to the belief that as
societies progress, particularly through

modernization and rationalization, religion loses its
authority in all aspects of social life and governance.
Modernization, Cultural Change and
Democracy, New York and Cambridge: Cambridge

University Press, 2005)
People's basic values and beliefs are changing, in
ways that affect their political, sexual, economic, and
religious behavior.
Modernization is a process of human development,
in which economic development triggers cultural
changes that make individual autonomy, gender
equality, and freedom increasingly likely.
Culture Shift in Advanced Industrial Society
(Princeton: Princeton University Press, 1990).

Economic, technological, and sociopolitical changes
have been transforming the cultures of advanced
industrial societies.
Value shift is part of a much broader process of
cultural change that is gradually transforming

political, economic, and social life in these societies.
Modernization and Postmodernization

Economic development, cultural change, and political change go
together in coherent and, to some extent, predictable patterns.
Industrialization leads to related changes such as mass mobilization
and diminishing differences in gender roles.
Changes in worldviews seem to reflect changes in the economic and
political environment
but take place with a generational time lag.
Following industrialization, advanced industrial society leads to a
basic shift in values, de-emphasizing instrumental rationality.
Postmodern values then bring new societal changes, including
democratic political institutions and the decline of state socialist
regimes.
Authority and Value Systems.

Source: R. Inglehart, Modernization and Postmodernization (Princeton, 1997).
Self-expression values are part of a core value
dimension in the modernization process.

Self-expression is a cluster of values that include
social toleration, life satisfaction, public expression
and an aspiration to liberty.
On the InglehartWelzel Cultural Map selfexpression values are contrasted with survival
values, illustrating the changes in values across
countries and generations.
How Culture Varies ?

Analysis of WVS data asserts that there are two major
dimensions of cross cultural variation in the world: 1)

Traditional values versus Secular-rational values and
2) Survival values versus Self-expression values.
Traditional values emphasize the importance of religion,
parent-child ties, deference to authority and traditional

family values. People who embrace these values also reject
divorce, abortion, euthanasia and suicide. These societies
have high levels of national pride and a nationalistic outlook.
Secular-rational values have the opposite
preferences to the traditional values. These societies

place less emphasis on religion, traditional family
values and authority. Divorce, abortion, euthanasia
and suicide are seen as relatively acceptable.
Industrialization tends to bring a shift from traditional values to
secular-rational ones.
With the rise of the knowledge society, cultural change moves in a new
direction.
The transition from industrial society to knowledge society is linked to
a shift from Survival values to Self-expression values.
Survival values place emphasis on economic and
physical security. It is linked with a relatively

ethnocentric outlook and low levels of trust and
tolerance.
Self-expression values give high priority to
environmental protection, growing tolerance of
foreigners, gays and lesbians and gender equality,
and rising demands for participation in decisionmaking in economic and political life.
Examples
Societies that have high scores in Traditional and Survival
values: Zimbabwe, Morocco, Jordan, Bangladesh.

Societies with high scores in Traditional and Selfexpression values: the U.S., most of Latin America, Ireland.
Societies with high scores in Secular-rational and Survival
values: Russia, Bulgaria, Ukraine, Estonia.
Societies with high scores in Secular-rational and Selfexpression values: Sweden, Norway, Japan, the
Netherlands
SURVIVAL VALUES emphasize the following: Attitude: Correlation:

gives priority to economic and physical security over self expression and quality
of life [Materialist/Postmaterialist Values] .87

Men make better political leaders than women .86
is not highly satisfied with life .84
A woman has to have children to be fulfilled .83
rejects foreigners, homosexuals and people with AIDS as neighbors .81
has not and would not sign a petition .80
is not very happy .79
favors more emphasis on the development of technology .78
Homosexuality is never justifiable .78
has not recycled something to protect the environment .76
has not attended a meeting or signed a petition to protect the environment .75
A good income and safe job are more important than a feeling of accomplishment
and working with people you like .74
does not rate own health as very good .73

A child needs a home with both a father and a mother in order to grow up happily .73
When jobs are scarce, a man has more right to a job than a women .69
A university education is more important for a boy than for a girl .67
Government should ensure that everyone is provided for .69
Hard work is one of the most important things to teach a child .65
Imagination is not of the most important things to teach a child .62
Tolerance is not of the most important things to teach a child .62
Leisure is not very important in life .61
Scientific discoveries will help humanity .60
Friends are not very important in life .56
You have to be very careful about trusting people .56
has not and would not join a boycott .56
is relatively favorable to state ownership of business and industry .54
SELF-EXPRESSION VALUES take opposite position on all of above
The desire for free choice and autonomy is a universal
human aspiration, but it is not top priority when

people grow up feeling that survival is uncertain.
As long as physical survival remains uncertain, the
desire for physical and economic security tends to take

higher priority than democracy.
When basic physiological and safety needs are fulfilled
there is a growing emphasis on self-expression values.
Clash of Civilization ???
Creativity and Happiness

Creativity, Growth, Nudge and Happiness: the
Case of Shanghai
Pan Jin, Director International affairs Shanghai
UNESCO Creative City Promotion Office Deputy
Secretary General, Shanghai Creative Industry
Center & Francis Munier, University of Strasbourg,
France
INTRODUCTION
Florida R, Mellander C, & H. Qian (2012)
() that neither talent nor technology is associated with the
economic performance of Chinese regions () obstacles in
moving () to a more knowledge-based economy.
Brockmann et al. (2009)

Subjective well-being index in China decreased despite
improvement in material living standards and increasing of GDP
growth.
INTRODUCTION
Discontinue the historical
model based on low labor
costs
Uphold the quantitative
growth and improve the
quality of life of citizens
Created in China rather
than made in China?
INTRODUCTION
Need to focus on creativity and

well-being is now the new
challenge
World Bank (2012), China 2030:
Building a Modern, Harmonious,
and Creative High-Income
Society, report
INTRODUCTION
Cultural assets for

creativity and happiness
Matching outputs of
economics of creativity and
economics of happiness in
the case of Chinese culture
AGENDA
Creativity and Creative City
Creative Class Values
Creativity and the milieu
Hard versus soft infrastructures
Dilemmas of creativity
Guanxi
Nudge
Happiness
Creative city
City appears to be the

ideal "space" for
identifying and
promoting creativity,
and also for conducting
ad hoc policies
Creative Class - Values

Florida (2002) : creative class
is the focal node of the creative

dynamics of cities.
Congruence between talent,
technology and tolerance.

Creative people are well
educated and graduates.

Tolerant behavior - the so-
called postmodern values

(Ingelhart, 1997).
Creative Class, Values and some Indexes

Tolerant image of the city
would be a key element

for attracting creative
class.
Florida (2002) : "The
Gay Index" and "The

bohemian Index" as
proxies indicators for
attractiveness and
creativity.
Creativity and the importance of the milieu
Interesting : importance of the milieu as catalyst for
creativity.
Technology and knowledge are necessary but not
sufficient.
The milieu plays a key role in creativity.
Creativity and the importance of the milieu

Culture and Civilization
Creative Clusters (Flew, 2005)

Cultural-Creative Clustering Strategy (Mommaas, 2009)
Creative Industries (Tschang, 2009)
No replication of these strategies

(Oakley, 2009; Pratt, 2009)
Hard versus soft infrastructure
Landry (2000, p. 133) : creative environment is a
combination of hard infrastructure and soft

infrastructure
Hard : network of institutions and districts which
define the idiosyncrasy of a city, and also

investments, core strategies.
Soft Infrastructure
Soft Infrastructure :
system of associative structures and social
networks, connections and human interactions, that

underpins and encourage the flow of ideas between
individuals and institutions
Potential vector of original creative process
Soft infrastructures as cultural assets
Creative city
Cohendet et al. (2010)
Three layers could shape the anatomy of a creative city:
underground which concern the level of individuals,
middle ground as the level of communities and the
bridge between the under and upper ground
upper ground as the level of formal firms and
institutions
The dynamic of creativity in a city is the expression

of the solution of dilemma
Munier F. (2013), Creativity and uncertainty in the act of work : the contribution of
the viability theory, The economics of creativity : ideas, firms and markets.- London
Routledge
The nature of the dynamic of creativity in a city is the
expression of the solution of the dilemma
between the informal and free creativity of individuals

(underground / soft infrastructures)
and the more formal and coerced behaviors of institutions (for
instance municipalities, agencies, and government)
in the implementation of policies such as creative cluster strategies
(upper ground / hard infrastructures).
Expression of the dilemma
The dilemma is between control (hard infrastructure)
versus commitment (soft infrastructure)

and stability (hard infrastructure) versus change (soft
infrastructure).
Hard infrastructure is a source of coherence and order, but
also a source of inertia
Soft infrastructure is a source of creativity but caution to
codes and references
Creative city as a form of duality where this dilemma

is resolved
A creative city as a form of duality where this
dilemma is resolved
The role of a creative city is not only to allocate
resources according to the hard infrastructures logic,

but also to initiate creativity without too much
constraints and pressures at the underground
Creative Milieu - Guanxi
We analyze the Soft Infrastructures as keys elements
of Creative Milieu in the case of Chinese Culture.

For that, we introduce the concept of Guanxi to show
the cultural advantage of Chinese society in

managing the dilemma of creative city
Definition Guanxi
Technically,
Guanxi
stands
for
any
type
of
relationship
Guanxi is than a social capital, an important
resource that a person can use in order to find some

best practices.
Guanxi is also a set of assets, a hyphen between
individuals and formal institutions (Xin & Pearce,

1996).
Definition Guanxi
Guanxi can facilitate the transfer of tacit knowledge

Guanxi can build up the trust that is necessary for
someone who wants to share his experience (Levin &

Cross, 2004).
Guanxi could be the natural middle ground of

creative city in China
Related link between the two types of infrastructure
could be a very specific social capital:
Guanxi as a community of knowledge (Munier & Huan, 2010).
Guanxi could be the natural middle ground of creative
city in China (Soil of the Chinese culture (Fei, 1992))
Confucianism, copyright and creativity

It has been argued that
Chinas Confucian
traditions focused on the
transmission or passing
down of creative works
for others to build on,
rather than learning or
creation as in
individualized activity
Montgomery L. & B.F.
Fitzgerald (2006)
creative da-tong Liao (2006, p. 402)
The phrase creative da-tong incorporates western reformist
agendas with the current official Chinese agenda. The Chinese

term da-tong () can serve as a keyword that provides a further
development goal, incorporating the current Chinese policy
agenda of xiaokang [middle-class, well-off] society, and also
embodying the alternative notion of creative industries that builds
on the concepts of free culture () and creative labour. Creative
da-tong describes a political and pragmatic coalition of creative
labour (not yet intellectual propertized) with cultural industries
(on the way to being disorganized and networked.
Nudging creativity in the city

Thaler H.R. & C.R. Sunstein
(2008, pp. 5-6) assert that

nudge leads any aspect of
the choice architecture that
alters peoples behaviour in
a predictable way without
forbidding any options or
significantly changing their
economic incentives () to
influence choices in a way
that will make the chooser
better of as judged by
themselves.
Nudging creativity
Nudging creativity seems to be the viable policy both
to keep and promote the dynamics of creativity at the

underground together with a capture at the upper
ground
Viable in the sense that nudge avoids the opposition
between them.
The government has to influence and to promote
Creative clusters without stifling the very creativity
of creators.
Nudging creativity in the city
Nudge policy seems to be than the smart policy
because of freedom for creativity at the bottom-up

process
This is again a form of Dual-Track approach
(Gang, 1994) that permits both market incentive and

state intervention.
Nudging creativity
Nudge policy appears to be also very useful
considering the very specific role of Guanxi in

Chinese society.
Include the aspect of social pressures in the choice
architecture.
Individuals consider how others perceive them; look
at some people within the community when they
have to cope with some difficulties; search trust and
use the inter-relational influences.
Very close to Guanxi
Happiness
Growth and money
explain only partially the

happiness of individuals.
This happiness paradox
is also observed in China

(Easterlin et al., 2012).
The pursuit of prosperity
must now be relying on the
interrelated issue of
happiness and creativity
Happiness and Creativity

Binder (2012) highlights the importance and the nature
of the link between innovativeness and happiness

If economic growth and the transformation of an
economy lead to unhappiness, policy makers will have
to balance their demand for economic growth with
measures to mitigate the negative impact on subjective
well-being or otherwise face the danger of loosing
citizens support for their policies.
Flow theory
Csikszentmihalyi
Flow is defined as an autotelic experience

Most of the time, flow people feel this experience during
the process of creation
Autotelic people often brimming with activity, never
counting the hours, are always ready to innovate or be
involved in a new project.
Flow theory
Csikszentmihalyi
Moreover, the flow theory is very interesting for our

purpose because it provides replies to questions as:
If We Are So Rich, Why Arent We Happy?
Flow theory
Csikszentmihalyi
The prerequisite for happiness is the ability to get

fully involved in life () Creating conditions that
make flow experiences possible is one aspect of that
pursuit of happiness for which the social and
political community should be responsible
Csikszentmihalyi (1999a).
Flow theory
Csikszentmihalyi
Flow people are also looking for recognition.

Creativity is as much a cultural and social as it is a
psychological event
Guanxi
Flow theory
Csikszentmihalyi
The domain (a system of symbols and practices

regarding a body of knowledge) and the field (a
collection of individuals and institutions that evaluate
products in a certain domain during a particular
historical period) are associated with socio-cultural
factors.
Creative Class and Happiness

According to Florida et al. (2013), the emergence of a
creative class is a well vector for both social and

human capital.
Education and creativity will lead to more
interconnection, more creative class and also to more
trust.
Positively correlated with happiness (Powdthavee

& Stutzer, 2014).
Creative goods and Happiness
Good life is a close concept of eudemonism:
the process is more important comparing to the objective itself
education and wisdom provide well-being and avoid

consequently the frustration of hedonic treadmill.
Creative goods and Happiness
Creativity provides the freedom of choice that is a
route to self-realization and happiness.

This freedom of choice is related to the idea of nudge
as libertarian paternalism policy (Binder, 2012)

Capabilties
Conclusion
Idea that the economic model based on growth with
low cost of labour is no longer viable and that it

should go to the made in china to created in
china
Chinese culture seems to have a natural advantage
based on the practice of Guanxi.
This is similar to a community of knowledge and
appears as the middle ground level of the anatomy of
a creative city.
Conclusion
Chinese culture allows also an adapted Nudge policy
application.
Connection between creativity and happiness
The outlook is to overcome the limitations of this
article which is essentially programmatic.

Try to provide empirical evidence to the conceptual
foundations
The creative class, postindustrialism and the happiness

of nations (2011), Charlotta
Mellander, Richard Florida and Jason
Rentfrow,
Cambridge Journal Regions Eco Soc
Happiness stems from another structural factor
associated with the level of economic development.

Higher levels of subjective well-being will be
exhibited in societies that have made the transition
to post-industrial economies
those with higher levels of education and where a
greater share is engaged in knowledgebased and
creative work.

Sacks et al. (2010) suggest that there is a close
relationship between material living standards and

life satisfaction
and that countries that experience a rapid economic
growth also get an equivalent increase in life

satisfaction levels.

Graham (2008) finds the relationship between the
Income and Happiness is relative.

Noting the paradox of the happy peasant and the
miserable millionaire
Graham contends that although people can adapt to
be happy at low levels of income, they are far less

happy when there is uncertainty over their future
wealth

Thus, the income effect on happiness is not only
based on
individual perceptions but also on

the social and economic context in which individuals
are embedded : rate of unemployment, institutions,

stability, etc.

There is a substantial literature documenting the
transformation from industrial to post-industrial

economies and societies.
Nearly a half-century ago, Machlup (1962) identified
the rise of the knowledge economy.

Drucker (1967) coined the term knowledge worker
to refer to the emerging social group of workers who

understand how to apply knowledge to productive
use.
This construct was later expanded to one of a
knowledge society (Drucker, 1993) where the

traditional means of production are replaced by
human capital and new institutional structures.

Bell (1973) predicted the rise of a post-industrial
society led by a class of highly educated scientists

and technocrats.
Reich (1991) described the rise of what he termed
symbolic analysts a sector of workers comprising

engineers, scientists, executives and professors,
whose work involves processing and manipulating
information and symbols.

Empirical support for these transformations
revealed that as of 1996, the scientific, professional

and knowledge economy (defined as industries
where at least 5 per cent of the workforce has
graduate degrees) accounted for 36% of US
employment (Brint, 2001).

Florida (2002) documents the rise of the creative
class as a hallmark of post-industrial societies

Empirical studies find the creative class has been
growing substantially for decades in the advanced

economies, while the proportion of blue-collar
workers has been declining (Boschma and Fritsch,
2009; Clifton, 2008; Florida and Tinagli, 2004).

The creative class includes occupations in computer
science and mathematics; architecture; engineering;

life, physical and social science; education, training and
library science;
As well as arts and design work, work in and
entertainment, sports and media;
and also professional and knowledge work occupations
including management occupations, business and
financial operations, legal positions, health care
practitioners, technical occupations and high-end sales
and sales management.

Post-industrialism has been found to be associated with
a significant shift in values.

This shift revolves around a movement away from
traditional religious values, conformity, norms about
seniority, conventional views about gender and
sexuality and redistributive interest-group politics
to new values that are more secular in nature,
encourage self-expression and individualism, openness
and tolerance and favour public goods over
redistribution (for example, the rise of environmental
awareness).

Whether and to what degree the creative class and
post-industrial structures affect life satisfaction.

Life satisfaction to be comparatively high in nations
that are inclusive and accepting of alternative
lifestyles and cultures.
This latter hypothesis is particularly important, as
previous work suggests that freedom, equality and
social relationships have greater influence on wellbeing in wealthy societies compared to poor ones
(Diener and Seligman, 2004).

Hypothesis : National levels of happiness and
subjective well-being are higher in nations with

greater levels of the creative class and post-industrial
structures and post-materialist values.
Two distinctive mechanisms driving this difference.

One mechanism is employment and the nature of the
labour market.
Results from a number of studies indicate that wellbeing is positively related to job satisfaction (Diener and
Seligman, 2004),
and job satisfaction is linked to job complexity (Judge et al., 2001),
the range of skills used on the job (Glisson
and Durick, 1988),
personjob fit (Roberts et al.,
2007)
and perceived control over ones work
(Grebner et al., 2005).

It is conceivable that wellbeing is higher in post-
industrial societies because more individuals are

engaged in jobs that offer more satisfying work
experiences compared to industrialized societies.
Therefore, larger proportions of people in postindustrial nations should derive satisfaction from
their jobs and, as a result, experience greater life
satisfaction compared to individuals in industrial
nations.

Also, individuals in creativeknowledge
professional jobs experience lower rates of

unemployment than those in bluecollar industrial
work or lower skill service jobs.
Individuals in creativeknowledgeprofessional
work also tend to have higher level and more flexible
skills that enable them to switch jobs more readily
than others when laid off,
or to find new more fulfilling employment if their job
becomes less interesting.

A second mechanism that could contribute to social
structural differences in well-being is education.

Post-industrial nations are characterized by more
highly educated individuals. While previous studies
have not found a close relationship between
education and well-being (Diener, 1984; Diener et
al., 1999),
Several mechanisms through which education affects
happiness.

Nations with more educated individuals may be
comparatively high in life satisfaction because

education affords many opportunities and
experiences that are linked to happiness.
Education is positively related to social mobility,
income and
occupational status,
and negatively related to depression (Becker, 1993;
Lipset and Bendix, 1959; Mincer, 1974; Mirowsky
and Ross, 2003)

Education is also associated with more stable
marriages and family ties, factors that are closely

correlated with subjective well-being (Glenn and
Supancic, 1984; Lyngstad, 2004).
More educated individuals postpone marriage and
have more opportunities over time to select more

suitable partners (Dixon, 1978; Goldstein and
Kenney, 2001).

Individuals with higher levels of education tend to
engage in work that employs greater levels of

cognitive and social skill,
and studies of job satisfaction note a close
connection between challenging work and happiness
(Judge et al., 2001).
Education is also closely associated with
unemployment.

Methodology and results
Service class: proportion of a nations residents who
work in routine service occupations such as

preparation and food service-related occupations,
building and grounds, cleaning and maintenance,
personal care and service, low-end sales of more
standardized products, and services, office and
administrative support, community and social
services and protective services.

Manufacturing class:
This group consists of occupations related to
construction and extraction, installation,

maintenance and repair, production, transportation
and material moving occupations

Post-industrial structure
Human capital: expressed as the share of the
age group enrolled in tertiary education which

include training at a wide range of post-secondary
education institutions, including technical and
vocational schools, community colleges and
universities, which normally require as a minimum
condition of admission the successful completion of
education at the secondary level.

Results :
Strong and significant relationship between GDP per
capita and life satisfaction. This suggests that people

living in wealthy nations, where the standard of
living is high, are more satisfied with their lives
compared to people in less wealthy nations.
GDP per capita and life satisfaction are lower for
high-income countries (0.52) compared to lowincome countries (0.62).

Relationship between educational attainment and
life satisfaction varies as a function of national

wealth.
It is conceivable that highly educated people who live
in low-income countries are less satisfied with life
because they may have fewer opportunities to apply
and use the skills they have developed.

A similar pattern of relationships emerges for life
satisfaction and share of the labour force in creative

jobs.
Across all countries, the correlation between the life
satisfaction and the creative class is quite strong,
but when analyse low- and high-income nations
separately, only high-income countries display a
positive relationship between life satisfaction and
creative jobs

This suggests that people who live in low-income
countries with high shares of creative jobs

experience lower levels of life satisfaction compared
to people in high-income nations.

For all countries, there is a strong and significant
correlation between life satisfaction and service class

(0.45),
but different patterns of results emerge when
analyse low- and high-income countries separately.
Among low income countries, the relationship
remains positive (0.48) and among high-income
countries the link is negative !

In low-income countries, a higher share of service
jobs is a sign they are undergoing an economic

transition, moving from manufacturing-based
production to an economic system that is more
dependent on services.

Across all countries, the correlation between share of
the workforce in manufacturing class jobs and life

satisfaction was negative and significant (0.32),
but when low- and high-income nations are analysed
separately, the relationship is small and nonsignificant among low income countries (0.18) and
large and negative among high-income countries (
0.53).

Taken together, these results suggest that national
differences in life satisfaction should be understood

not only in terms of income but also in terms of postindustrial structures and values.
Indeed, education and creative class work structures
both contribute to national levels of life satisfaction
in high-income nations.
Our conclusion regarding human capital stands in
some contrast to the findings of previous research,
which found no close relationship between education
and well-being
Key Findings The Economy

Across countries, higher income nations generally experience higher
average levels of subjective well-being at any given point in time (crosssectional data).
The correlation across countries between high national income and
well-being is substantially reduced once quality of government,

democracy and social capital is controlled for.
Within countries, individual income and life satisfaction are positively
related at any point in time (cross-sectional data).

Across developed nations there is not always a relationship between
changes in national income and changes in levels of well-being over

time (longitudinal data) suggesting that once a certain level of
national income per capita has been reached (which varies from
country to country) general increases in national income per capita do
not necessarily translate into substantial increases in subjective wellbeing.
Relative income has been found to have a substantial and important
effect on well-being and explains much of the income-well-being
relationship.
The satisfaction with life measure and Cantrils Ladder seem to be more
strongly related to income than other measures of well-being, for
example overall happiness or emotional well-being.

Higher income-growth countries seem to experience higher levels of
subjective well-being although this relationship is complex and

depends on the national income per capita.
At the individual level, lower household income appears to lead to
lower childrens well-being.
Although not wholly conclusive, evidence suggests that a higher level of
income inequality in a country seems to reduce the average subjective
well-being of its citizens.
Higher public spending and benefit entitlements appear to be
associated with higher well-being at the national level.
In Europe, there is a positive relationship between child well-being and
both national spending on family services and benefits, and GDP.

Unemployment is strongly negatively correlated with various measures
of subjective well-being. This relationship exists over a range of

national and international datasets.
Unemployment is negatively associated with well-being across a range
of nations but the size of its effect seems to vary across countries and
across studies.
Although some people with lower well-being may be more likely to
become unemployed, these selection effects do not explain the size of

the relationship between unemployment and well-being.
Although people may adapt somewhat to being unemployed, the effect
does not seem to completely disappear.

The loss of well-being far exceeds that expected from
the reduction in income associated with

unemployment.
National and regional unemployment rates have
been found to reduce subjective well-being.
However the effects of individual unemployment on
well-being seem to be partially neutralised in highunemployment regions.

There appears to be a positive effect of being self-employed on
well-being, but the evidence is mixed.

When workers function well and feel secure in their job they
are more satisfied with their work.
There seems to be a U-shaped relationship between hours
worked and subjective well-being.
In general, credit card and unmanageable debt is associated
with lower well-being. This relationship, however, does not
hold for mortgages or investment debts.
Commuting is associated with negative affect and a reduction
in life satisfaction.
Key Findings Community

Strong social networks and time spent socializing are
positively associated with subjective well-being.

There appears to be a positive relationship between
volunteering and subjective well-being, and altruistic
behaviour promotes subjective well-being.
There is a positive relationship between subjective well-being
and membership of (non-church) organisations.
Regular engagement in religious activities is positively related
to well-being.
Social trust (trust in other people) is found to be associated
with higher life satisfaction and happiness, and a lower
probability of suicide.
Key Findings Community

Trust in key public institutions for example,
government, the police and the legal system is

associated with higher life satisfaction.
There is a positive link between democracy and life
satisfaction.
Being single is worse for well-being than being in a
stable relationship.
Family conflict is associated with lower childrens
well-being.
Key Findings Health

Poor self-reported health is associated with lower subjective well-
being and better self-reported health is associated with higher

subjective well-being.
Poor objective health and disability are associated with lower
subjective well-being, although this relationship is weaker than that
of self-reported health and subjective well-being.
Although people may adapt somewhat to chronic illness, complete
adaptation does not seem to occur.
Higher subjective well-being is associated with improved health and
longevity.
Psychological health has a very strong relationship with subjective
well-being, and seems to be more highly correlated with well-being
than physical health.
Key Findings Health

Physical activity has a beneficial effect on well-being
(as well as on health).

Sleep problems are associated with lower life
satisfaction, lower happiness and a reduction in
other measures of subjective well-being.
In addition, optimum sleep levels are associated with
positive benefits to most of the measures of
subjective well-being.
Key Findings Education and Care

Many (but not all) studies have found that more education is
often associated with higher subjective well-being, when

controlling for other variables (particularly income and
health).
However, some studies reveal no significant relationship or a
negative relationship between education level and well-being,
and in several cases it appears the relationship is non-linear.
There is a positive association between positive features of
childrens learning environments and their well-being.
More time spent in informal care-giving is associated with
lower subjective well-being.
Key Findings The Built Environment

Living in a deprived area, even after controlling for income, is
detrimental to life satisfaction and affects other dimensions of wellbeing.

A positive perception of the surrounding landscape is linked to other
dimensions of well-being.
Natural landscapes appear to be more restorative than urban ones.
There is evidence that aspects of neighborhoods such as walkability
and street layout are positively related to well-being; it seems likely that
this relationship operates indirectly via benefits to social capital for
residents.
High housing quality is positively associated with well-being; low
housing quality is associated with lower well-being and psychological

stress.
Key Findings The Built Environment

Multi-dwelling housing is associated with adverse psychological health.
Overcrowding is associated with lower well-being.
Living on a higher floor level is associated with lower well-being.
Home ownership is associated with higher well-being; renting is associated
with lower well-being.

Subjective well-being appears to be lower in more densely populated areas and
higher in rural areas.
The concentration of air pollutants in the region where an individual lives has a
negative impact on subjective well-being.
Noise pollution is associated with lower subjective well-being.
Crime is negatively associated with well-being, both for victims and for
residents in areas of high crime rates.
Climate has an effect on subjective well-being and extreme weather is
detrimental to well-being.
Key Findings Personal characteristics

There is a U-shaped relationship between age and subjective well-being: as
young people grow older their subjective well-being reduces, until a wellbeing minimum is reached between the ages of 35 and 50, and after that age
subjective well-being increases again.
There are international differences in subjective well-being across genders.
Race is an important predictor of current happiness and life satisfaction in
the United States, where the White population has higher levels of average
well-being than the Black population. However, the lack evidence from other
countries means this cannot be generalized to Europe and other regions.
Studies suggest that up to half of the variation in subjective well-being
between individuals can be explained by genetics.
Personality traits are strongly related to subjective well-being
There is a negative relationship between materialist values and subjective
well-being.

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The Economics of Happiness

Cloud of relevant words

Today, it is not just perfectly legitimate

to pursue happiness, but not being

To show sadness or a negative attitude

is a sign of social failure.

as heralding the beginning of this field of research

not feel favored.

justify themselves on the grounds that

Ruut Veenhoven (1993) Happiness

Difference between poor and

how and why happiness has

Is it true that people in

Or is this view just a

romantic notion that does

many central questions :

How important is wealth to

How do various factors such as

Are people who buy new products

Can we find a correlation between

Are people with a higher income

ask these kinds of

in this area constitutes a

a. Salient facts on happiness

III. Happiness and Creativity

a. Creativity, Growth, nudge : the case of

Test - Topic of report

Final test : (50% of the grade)

Report and oral presentation around 10 pages (guideline) : 50%

Some glimpses of Economy of Happiness

The big question: what is happiness ?

Philosophy try to define what a good and happy life is

Eudaimonia versus hedonia

Some glimpses of Economy of Happiness

Differences between Hedonic and Eudaimonic well-

Life satisfaction (Hedonia) versus Personal growth

Some glimpses of Economy of Happiness

Well-being defined by pleasure attainment and pain avoidance

Some glimpses of Economy of Happiness

Well-being defined degree by which a person is fully

Some glimpses of Economy of Happiness

good, happy life)

Some glimpses of Economy of Happiness

virtuous life and power are the

Some glimpses of Economy of Happiness

pleasure, disdain of sadness.

Some glimpses of Economy of Happiness

Islamism, taoism, etc.

Some glimpses of Economy of Happiness

what particulars ingredients

branch of psychology Positive

Some glimpses of Economy of Happiness

happiness being the ultimate goal

Some glimpses of Economy of Happiness

Some glimpses of Economy of Happiness

procedural aspects may play a

than outcomes has been called the

Some glimpses of Economy of Happiness

elusive concept, it makes

Some glimpses of Economy of Happiness

It is also useful to look at two polar concepts of

happiness: subjective and objective happiness

Some glimpses of Economy of Happiness

Some glimpses of Economy of Happiness