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"Are you happy right now?"
How would you answer this question? Surveys conducted by the Cabinet Office, universities, and other research institutions ask people to rate their own happiness level with a score or choose from a four-point scale - "happy," "somewhat happy," "somewhat unhappy," or "unhappy" - and then analyze the answers.

The results of these surveys are the basis for an index known as "happiness index." Happiness index is an index that measures people's affluence, and is calculated from data such as individuals' subjective evaluation of their own happiness, taking into account various factors (income and consumption levels, family structure, employment status, etc.). "The economics of happiness" seeks to clarify the relationship between these factors and happiness index.

Traditionally, research into happiness has been centered in fields such as psychology, sociology, philosophy, ethics, and psychiatry. Meanwhile, economics has developed by focusing on "material wealth and monetary activities." For this reason, the abstract concept of "happiness" has rarely been the subject of research, especially in economics.

Of course, income and other economic aspects of a household play a large role in determining an individual's quality of life. However, this is not the only factor that determines quality of life, and an individual's wealth and happiness cannot be measured in monetary terms alone. For this reason, in recent years, there has been a growing trend to emphasize that what constitutes an individual's wealth should not only be "material and objective elements," but also "spiritual and subjective elements."

Japan has achieved remarkable economic development since the end of World War II, and real GDP per capita has increased dramatically. However, according to the results of the Cabinet Office's "Public Opinion Survey on National Life," the percentage of people who answered that they are "satisfied with their current lifestyle" has remained at around 60-70% since the survey began in 1958, with no sign of an upward trend, although there have been short-term fluctuations. Moreover, in recent years in particular, problems such as the widening gap between rich and poor, the increase in NEETs, and the expansion of the poor seem to be becoming more serious. So why is it that economic development does not necessarily increase people's satisfaction?

The economics of happiness is an academic field that has developed rapidly against the backdrop of such questions and concerns. By creating a "new framework" for measuring people's "subjective happiness," it has the potential to provide a new analytical perspective on issues that could not be analyzed in depth using the traditional framework of economics alone. Economists are also beginning to analyze the impact of household finances and employment situations on people's satisfaction and happiness, such as the effects of income fluctuations and unemployment, which have rarely been analyzed in fields such as psychology.

So, what is this "new framework" for measuring people's "subjective happiness"?

In conventional economics, it has been thought that it is strictly impossible to compare utility (the level of satisfaction people get from consuming goods and services) between individuals. Furthermore, the mainstream opinion was that it is meaningless to compare the subjective happiness of person A and person B.

On the other hand, it is now believed that, if the conditions are right, it may be possible to analyze subjective indicators such as happiness and life satisfaction, and the data that underpins them, in a manner consistent with the economics system. For example, it is possible to explain that people's happiness has a certain "baseline," and that short-term news only temporarily causes people's happiness to deviate from that baseline. This is called the "baseline hypothesis."

If this hypothesis is correct, then by repeatedly observing the happiness of a particular individual and observing the change in that person's happiness when certain news comes in, we can determine whether the impact of that news on people's happiness is positive or negative compared to the baseline. If we observe a phenomenon in which the happiness of a large number of people changes in a positive direction, then we can safely say that "that news is increasing people's happiness."

In this way, if it is possible to continuously observe an individual's happiness and if a large number of people can continue to participate in the survey, it will be possible to analyze how "life events" such as marriage, divorce, childbirth, unemployment, illness, and injury affect happiness, without contradicting the traditional economic system.

One study that used these methods to examine the impact of life events on happiness produced analysis of "how happiness changes before and after marriage."

This paper uses large-scale data collected over a period of approximately 20 years in the former West Germany to analyze changes in happiness before and after marriage for people who have experienced marriage. The results show that "for both men and women, happiness gradually increases from one to two years before marriage, peaking around the time of the event of marriage, but then happiness gradually declines, returning to its original level two years after marriage." There are other papers that show different analytical results, but the economics of happiness also makes it possible to analyze "how long the happiness brought about by marriage lasts."

Additionally, an "improvement in happiness" is seen in both men and women before and after a divorce. More specifically, it is known that "compared to the time of divorce, a decrease in happiness is seen two years prior, but happiness increases (improves) five years after the divorce." However, since this analysis only takes samples who have experienced divorce, it is important to note that samples who have not experienced divorce in the first place have a higher happiness level on average (and often have a higher level of happiness to begin with).

Next, we will introduce the results of research into the impact the birth of a child has on people's sense of happiness. The birth of a new life is generally considered to be "the event that brings happiness to life second only to marriage." However, particularly overseas, many papers have been published stating that "the birth of a child reduces the happiness of the parents."

The case of Japanese people is an exception, and statistics show that both fathers and mothers with infants have a higher than average sense of happiness. After the birth of a child, the happiness of both parents gradually declines, but it remains high for at least a few years after the birth. However, when analyzing mothers who have given birth and dividing them into "full-time housewives" and "those participating in the labor force," it was found that the happiness of mothers participating in the labor force drops sharply after giving birth. By carrying out this analysis further in the future, it may be possible to make policy recommendations from a new perspective regarding measures to combat the declining birthrate.

Traditional economics starts from the assumption that humans are simply "beings who act rationally." In reality, however, many people continue to behave in ways that cannot necessarily be explained by "rationality" in the narrow sense.

The powerful Hurricane Katrina that struck the southeastern United States in August 2005 killed more than 1,800 people and became the worst natural disaster in the history of the United States. The government's slow response at the time caused an outpouring of public discontent.

However, when the happiness of "residents near disaster-stricken areas" and "people across the United States" was investigated, the data showed that although a decline in happiness was observed among Americans, even in the most severely affected areas, a statistically significant decline in happiness was only observed "two to three weeks after the disaster occurred." In other words, although both groups became unhappy at one point, they returned to their baseline in a relatively short period of time.

However, whether the residents of Louisiana are living in the same "happy state as before the disaster" is another matter. Also, those who suffered truly serious damage may not have been in a position to cooperate with such a survey. The background to the compilation of the survey results must also be taken into consideration.

In Japan, there is data on changes in happiness levels among people nationwide before and after the Great East Japan Earthquake. One such survey was conducted in June 2011, asking people about their happiness levels as of February 2011, before the earthquake, and as of June 2011, after the disaster. The survey showed that about 30% of people experienced a change in their happiness levels before and after the earthquake, and in June, three months after the disaster, a significant proportion of those who had experienced a change, about 28%, reported an "improvement in their happiness levels."

It has also been found that people who made earthquake-related donations were more likely to have an improvement in their sense of happiness. Furthermore, data from the same survey shows that a significant number of samples (about 14%) answered that their sense of happiness had improved, even when their life satisfaction remained the same or even decreased. In other words, around one in seven people across Japan felt happier after the earthquake, even if their standard of living had not improved. These people may have realized anew how happy their lives had been after experiencing the disaster. Understanding the patterns in which such data change is also important for the economics of happiness.

I believe that the "economics of happiness" has the potential to attract more and more attention in the future as an important academic field for analyzing social conditions. If we were to compare happiness levels to diagnosing illnesses, we could say that they are like a "tool used in medical interviews." This tool is useful for examining the health status of an entire nation.

For example, if the average happiness level is falling despite GDP growing steadily thanks to government economic measures, it is possible that there is a problem or abnormality occurring in that society. The reason behind this could be an increase in stress among workers, or in more serious cases, an increase in the proportion of people suffering from mental illness.

In Japan, the population is rapidly aging, but for example, as we enter an aging society, if the government were to formulate measures after all the conventional statistical data is available, it may be too late. With regard to issues such as balancing work and caregiving, it may be possible to take measures more quickly by conducting surveys on quality of life, such as detecting the signs of declines in life satisfaction and happiness, before people's health is damaged by overwork or mental stress.

Furthermore, the economics of happiness also provides material for discussion about the future shape of society. For example, it is said that Japan has already entered a "society of inequality," but data-based discussion is possible when determining the direction of future policies, such as to what extent inequality should be taken into consideration in order to aim to raise the bottom line of overall income, or whether the priority should be to reduce inequality first.

In 1885, Alfred Marshall became professor of political economy at Cambridge University in the UK, and in his public lecture upon assuming the position, he stated, "It is my greatest wish to see as many cool heads but warm hearts as possible endowed with the best of their abilities, ready to contribute to the overcoming of social ills." From this perspective of returning to his original intentions, I believe that the economics of happiness has the potential to provide a clue to solving various problems in society.

(Published in 2016)