Are you happy?

What is happiness? How is it measured?
When Daniel Bernoulli came up with concept of utility (as what economic agents ie individuals maximize), he was probably thinking about happiness as Dan Gilbert says. Economists heve grown apart from such a concept thinking that utility is one thing (probably coming from consumption of goods) and happiness is something completely different, subjective, and to some degree, unmeasurable.

I, as an economist, believe this is erred. People usually seek to maximize happiness. As President Obama recently said people should be enabled to pursue their full measure of happiness. Yes, happiness is subjective, and as many econometric studies show it comes from many things: Income (but only to a certain extent), being married, having children, religion etc. (You may want to check Richard Layard's Happiness, Becker's and Rayo's papers on hedonics, and the book I recommended several posts below by Gilbert). A truly free society must allow individuals to derive happiness from whatever mean they derive it (except others' unhappiness). A free society will allow people to pusue whatever conception of good they have.

Maybe we should try to understand how people derive happiness (neuroeconomics will surely help). Maybe we should try to model it more often; maybe public policy should be oriented to incresing the recipient's happiness...

Its time to ask ourselves are we happy? How can we be happier?