The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Happiness, Economics of

  • Carol Graham
Reference work entry


The economics of happiness assesses welfare by combining economists’ and psychologists’ techniques, and relies on more expansive notions of utility than does conventional economics. The research highlights factors other than income that affect well-being. It is well suited to informing questions in areas where revealed preferences provide limited information – for example, the welfare effects of inequality and of inflation and unemployment. Despite the potential contributions for policy, a note of caution is necessary because of the potential biases in survey data and the difficulties in controlling for unobservable personality traits.


Behavioural economics Bounded rationality Capabilities-base approach to poverty Democracy Easterlin paradox Easterlin, R. Expectations Expressed preferences Gender Income vs. utility Inequality Interdependent utility Misery index Order bias Poverty Procedural utility Psychologists Revealed preferences Race Sen, A. Status Utility maximization Walras, L 

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I would like to thank Henry Aaron, Richard Easterlin, Joshua Epstein, Andrew Felton, Andrew Oswald, and George Perry for helpful comments.


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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Carol Graham
    • 1
  1. 1.