HAPPINESS RESEARCH: STATE AND PROSPECTS

REVIEW OF SOCIAL ECONOMY, VOL. LXII, NO. 2, JUNE 2005
Happiness Research: State and Prospects
Bruno S. Frey and Alois Stutzer
University of Zurich and CREMA - Center for Research in Economics, Management and the Arts
Abstract This paper intends to provide an evaluation of where the economic research on happiness stands and in which interesting directions it might develop. First, the current state of the research on happiness in economics is briefly discussed. We emphasize the potential of happiness research in testing competing theories of individual behavior. Second, the crucial issue of causality is taken up illustrating it for a particular case, namely whether marriage makes people happy or whether happy people get married. Third, happiness research is taken up as a new approach to measuring utility in the context of cost-benefit analysis.
Keywords: causality, cost-benefit analysis, happiness research, life satisfaction approach, marriage, selection, subjective well-being, terrorism
This paper intends to provide an evaluation of where the economic research on happiness stands and in which interesting directions it might develop. While the authors endeavor to provide a fair account, it is strongly influenced by our work undertaken at the chair for economic policy at the University of Zurich. The reader must be warned that other scholars might emphasize different aspects and problems, and in particular consider different future contributions to be important.
The first part of the paper discusses the current state of the research on happiness in economics. The survey section is on purpose kept short, mainly because the authors recently provided an extensive review in a journal and in a book (Frey and Stutzer 2002a,b). Here we only want to indicate the general flavor, and to direct the reader not familiar with the approach to the relevant literature. Instead, we emphasize the potential of happiness research in testing competing theories of individual

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