01 Feb 2002
When a Rainy Day Comes: The Economics of HappinessTopics:
A study by HBS assistant professor Rafael
Di Tella (with Andrew Oswald of the University of Warwick
in Coventry, England, and Robert MacCulloch of the London School
of Economics) finds that when a country is in a recession, the
number of people describing themselves as very happy
declines by about 10 percent. The general happiness of the population
suffers, too, even among people who do not personally experience
job loss or reduction in income.
behavioral economists and politicians, among others, these findings
raise the question of whether governments should become more proactive
in attempting to mitigate or stave off recessions. In addition
to enjoying a more satisfying life, which presumably is every
governments goal for its people, a happy population
is likely to be more productive than a disgruntled one
also an advantage for government.
The study is based on poll results involving some 300,000 individuals
in Europe and the United States over the last 25 years. Participants
were asked to describe their state of mind by selecting one of
three answers: very happy, fairly happy,
and not too happy. The authors found that the populations
that were happiest (or least unhappy) during recessions were in
countries that paid the highest unemployment benefits.