1.

The article with the most nominations from our panelists when asked to nominate 5 relevant papers in the wellbeing literature is

Easterlin, R. A. (1974). Does economic growth improve the human lot? Some empirical evidence. In Nations and households in economic growth (pp. 89-125). Academic Press.

Total google scholar citations: 8661

This is probably the first paper in economics using a self-reported happiness question. In this article Richard Easterlin developed what will be known as the Easterlin Paradox, a concept that has generated a huge literature within the field. In concrete, Easterlin examined data on nineteen countries from 1946 to 1970 and documented that while there was a positive correlation between income and happiness within countries, correlation across countries is smaller than expected. In addition, in the US for which there is data since 1946 there are periods in which happiness is fairly constant despite high economic growth. In this paper, Easterlin argues for relative concerns as an explanation for this finding.

Clark, A. E., Frijters, P., & Shields, M. A. (2008). Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles. Journal of Economic Literature, 46(1), 95-144

Total google scholar citations: 3736

This paper reviews the literature on the idea that people get a lot of their happiness from how they compare to others. This has been called status, positional goods, vanity, relative utility, and a few other terms. The paper’s guiding motive is the Easterlin hypothesis which holds that after a certain minimum income level there is very little social gain from higher individual consumption since most of the value of further consumption is then zero-sum (whenever one gets more, others get jealous and envious). The large implications for status in all manner of economic life – savings, labour supply, sticky wages, migration, housing, etc., are laid out and reviewed.

Blanchflower, D.G. & Oswald, A. J. (2004). Well-being over time in Britain and the USA. Journal of public economics, 88 (7-8), 1359-1386.

Total Google Scholar citations: 4385

This article finds that happiness had declined over recent decades in the United States and was flat in Great Britain. Although this result is consistent with the Easterlin Paradox, this paper finds important nuances. First, in the US there are differences between groups, mostly defined across gender and ethnic group; for example, “American men and blacks—have become happier through the decades”. Second, when moving to regression analysis, the authors find that after controlling for a large set of controls, there is a positive trend in wellbeing for Britain since the 70s. When running regressions at the individual level, the authors find that both income and relative income are important determinants of happiness, and that people care a lot about other variables, notably unemployment and marital status.

Clark, A.E. & Oswald, A.J. (1994). Unhappiness and unemployment. The Economic Journal, 104(424), 648-659.

Total Google Scholar citations: 3537

This article is one of the earliest articles in economics using the word happiness (or unhappiness) in their title, using self-reported mental distress scores (GHQ). It uses data from the British Household Panel Study (BHPS) to show a strong negative correlation between being unemployed (compared to those in work) and mental distress. The negative correlation was smaller for younger people, those that have been unemployed for longer, and those living in high-unemployment areas. That last finding was particularly interesting as it suggests unemployment is not so bad if many others are unemployed. This early paper was followed by a large stream of confirmatory later papers using different empirical strategies and data from different countries. If unemployment is harmful for wellbeing, even after controlling for income, then receipt of unemployment benefits should not disincentivize job search (for the average individual). This is an important policy conclusion.

Diener, E., Suh, E.M., Lucas, R.E., & Smith, H.L (1999). Subjective well-being: Three decades of progress. Psychological bulletin, 125(2), 276-302.

Total google scholar citations: 18272

Diener’s et al. article revolves around Wilson’s (1967) early findings/belief that the happy person to be well-paid, young, educated, religious, and married and how evidence has changed during the thirty years that span between the two articles. This article argues for a better understanding of the interaction between psychological factors with life circumstances and how this would also contribute to a better understanding of individual wellbeing, including issues such as causality and adaptation. The authors emphasize that the happy person is blessed with a positive temperament, tends to look on the bright side of things, and does not ruminate excessively about bad events, and is living in an economically developed society, has social confidants, and possesses adequate resources for making progress toward valued goals. The article ends by stating that “Hopefully, in 2028 nobody can possibly claim that we know nothing more than the ancient Greeks about subjective well-being.”

Stutzer, A. (2002). What can economists learn from happiness research? Journal of Economic Literature, 40 (2), 402-435.

Total google scholar citations: 4857

This article argues that the answer to the happiness questions can be understood as a proxy measure for utility, a central concept in economics. It then summarizes the main contributions of the literature and argues in favour of it use in economics. The article divides the relevance of the happiness literature for economics into three main points: the use of happiness to evaluate economic policy in terms of utility gains and losses, the importance of institutions and social capital for wellbeing, and the relevance of the happiness literature to feed theoretical models with information on concepts and assumptions. The article ends with recommendations for future research as well as discussing the challenges.

Easterlin, R.A. (1995). Will raising the incomes of all increase the happiness of all? Journal of Economic Behavior & Organization, 27(1), 35-47.

Total google scholar citations: 4237

This paper is a follow up of Professor Easterlin’s 1974 seminal contribution by providing new evidence on the weak correlation between income and happiness growth over time, despite the positive correlation, at a given point in time, between income and happiness. The author reconciles the two findings by referring to changing material norms. In other words, as income of all increases, material norms shift. This paper presents empirical evidence aligned with this argument.

Kahneman, D., Krueger, A.B., Schkade, D.A., Schwarz, N. and Stone, A. A. (2004). A survey method for characterizing daily life experience: The Day Reconstruction Method. Science, 306 (5702), 1776–1780.

Total google scholar citations: 4014

This paper introduces the Day Reconstruction Method (DRM), an innovative measure developed by the authors to understand how individuals spend their time and what they experienced every day while doing different activities. This DRM opened up a new research agenda that relates subjective wellbeing to time use.

Kahneman, D. & Deaton, A. (2010). High income improves evaluation of life but not emotional well-being. Proceedings of the national academy of sciences 107.38 (2010): 16489-16493

Total google scholar citations: 3450

This paper presents an analysis on the distinction between life satisfaction and emotional wellbeing, defined as the frequency and intensity of the following emotions: experiences of joy, stress, sadness, anger, and affection. Emotional wellbeing is measured with questions regarding yesterday’s emotional experiences and life satisfaction with the Cantril's Self-Anchoring Scale. The authors find that both measures have different correlates. Income, for example, shows a stronger correlation with life satisfaction and a plot analysis shows that while the correlation between income and emotional wellbeing flattens at around 75000 dollars, the correlation with life satisfaction is present at all income levels. The authors conclude that high income buys life satisfaction but not happiness, and that low income is associated both with low life evaluation and low emotional well-being.

Ferrer-i-Carbonell, A & Frijters, P. (2004). How Important is Methodology for the Estimates of the Determinants of Happiness? The Economic Journal, 114 (497), 641-659.

Total google scholar citations: 3270

This paper presents the first systematic analysis of all the implicit assumptions made when using life satisfaction (subjective wellbeing) measures to infer individuals’ utility or welfare. The authors classify the assumptions into three theoretical and three statistical assumptions and reviewed the impact that each of them has on the results. The paper concludes that while assuming cardinality or ordinality of the life satisfaction answers is rather innocuous to the results, how time persistent individual unobserved factors are taken into the analysis has a significant impact. The impact of income on life satisfaction, for example, gets reduced by about 2/3 when controlling for individual fixed effects.

Diener, E. D., Emmons, R. A., Larsen, R. J., & Griffin, S. (1985). The satisfaction with life scale. Journal of personality assessment, 49(1), 71-75.

Total google scholar citations: 36314

This paper contributes to life satisfaction measurement by presenting a study on the development and validation of the Satisfaction With Life Scale (SWLS), a 5-item scale designed to measure global cognitive judgments of one’s life satisfaction,. Respondents need to answer the 5 items using a 7-point scale from strongly agree (7) to strongly disagree (1). The paper shows evidence of the SWLS’ high internal consistency and temporal reliability and its moderate to high correlation with other measures of subjective well-being.

Oswald. A.J. (1997), Happiness and Economic Performance. The Economic Journal 107(445), 1815-1831.

Total google scholar citations: 2874

Written 25 years ago, this paper argues for the use of happiness indicators as a measure of progress to be used by policy makers and , defends happiness measures as being meaningful and having a legitimate place in the political agenda. The paper also complements Easterlin’s 1974 seminar contribution by providing newer evidence on the weak link between economic growth and happiness and highlighting the importance of other macro-economic indicators, notably unemployment, which “[…] appears to be the primary economic source of unhappiness”.

Kahneman, D., P. Wakker, and R. Sarin (1997). Back to Bentham? Explorations of Experienced Utility. The Quarterly Journal of Economics 112(2), 375-406.

Total google scholar citations: 2764

This paper formalized and argued for two different concepts of utility, namely decision and experienced utility, as introduced by Benthman before the marginal revolution. This made the paper an important milestone for the wellbeing literature in transitioning from a 1980s economic point of view (wherein people are super-rational and thus make decisions based on how they will feel about the outcomes) to a more modern behavioural point of view where it is an empirical question whether people's decisions are based on ultimate outcome maximisation. It also alerted the field to the question whether we should count as important what people on reflection think about their life or how they experience it in the moment. The paper also argues for the measurability, with direct questions, of utility. This paper has therefore been very central to the life satisfaction literature.

Luttmer, E.F.P. (2005). Neighbors as negatives: relative earnings and wellbeing. . The Quarterly Journal of Economics, 120(3), 963-1002.

Total google scholar citations: 2757

The two papers of the May reading list were published in the Quarterly Journal of Economics, but while the first paper is largely theoretical, this is an empirical paper. This is one of the first papers to examine the importance of relative concerns by means of a life satisfaction question. Using individual data on wellbeing and information about local average earnings, this paper finds that individuals report lower levels of wellbeing if, everything else constant, their neighbours have higher earnings.

Winkelmann, L., & Winkelmann, R. (1998). Why are the unemployed so unhappy? Evidence from panel data. Economica, 65(257), 1-15.

Total Google Scholar citations in 2021: 2256

This paper focuses on own unemployment. It examined the impact that own unemployment has on happiness using a panel setting with individual fixed effects. The authors find a strong negative correlation of happiness with unemployment. Following this paper, there has been growing evidence not only on the negative impact of unemployment on happiness, but most important, on examining the mechanisms behind this correlation.

Di Tella, R., MacCulloch, R.J., and Oswald, A.J. (2001). Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness. American Economic Review, 91, 335-341.

Total Google Scholar citations in 2021: 2319

This paper represented an important contribution to the literature; it examined for the first time the impact of macro-economic conditions, other than GDP, on happiness. While there were some papers examining the importance of GDP, this paper was the first to focus on other macro-economic indicators to show the importance of unemployment in the country or region. Specifically, it focused on the trade-offs between inflation and unemployment rate, in terms of wellbeing to conclude that unemployment rate has a much larger correlation subjective wellbeing than inflation. While growth shows a much weaker correlation, unemployment has a significant impact on happiness. This is in line with the literature (see paper 15) on the impact of own unemployment in happiness. This paper uses a two step model to show robust standard errors.

Blanchflower, David G., and Andrew J. Oswald. (2008). Is Well-being U-shaped over the life cycle? Social science & medicine, 66.8, 1733-1749.

Total Google Scholar citations in 2021: 2073

This paper is one of the first to examine how wellbeing evolves over time, while controlling for other variables that also vary over the life cycle, such as income, labor market status or family composition. This paper presents evidence of wellbeing being U-shaped through life with a minimum in the middle age. The authors argue that they can disentangle the age from the cohort effect. They find the same U-shape with age for mental health. More recent papers have confirmed and explore the channels that explain this U-shaped correlation (Schwandt, 2016, JEBO, 122:75-87), while Frijters and Beatton (2012, JEBO, 82: 525-542) have found that the downturn in mid-life looks much less pronounced when accounting for selectivity, and that there is a large downturn at the end of life when people lose health and approach death. So the whole-life trajectory is more like a wave.

Van Praag, B. M. S., Frijters, P., & Ferrer-i-Carbonell, A. (2003). The anatomy of subjective well-being. Journal of Economic Behavior & Organization, 51(1), 29.

Total Google Scholar citations in 2021: 1199

This paper presented a full model of wellbeing in which, for the first time, a two-layer model was proposed. In this model, wellbeing depends on the different subjective domain satisfactions (such as health, financial situation, job, leisure, housing, and environment) which, in turn, depend on individual or household objectively measurable variables, such as age, income, or family composition.

Card, D., Mas, A., Moretti, E., & Saez, E. (2012). Inequality at work: The effect of peer salaries on job satisfaction. American Economic Review, 102, 2981-3003.

Total Google Scholar citations in 2021: 1040

This paper is the first to causally examine the importance of relative comparisons for workers’ satisfaction and their job search intentions. In contrast with the 20th paper on the Wellbeing Reading List, this one does not derive from a natural experiment. Instead the authors developed an experiment based on a randomized manipulation of access to information. The treatment group are those employees who were informed about the existence of a web page in which they could search for the pay of other university employees. Those employees with salaries below the median reported lower job and pay satisfaction as well as an increase in the likelihood of looking for a new job. Those with salaries above the median experienced no significant change in pay satisfaction or reported job search.

Frijters, P., Haisken-DeNew, J.P., & Shields, M.A. (2004). Money Does Matter! Evidence from Increasing Real Income and Life Satisfaction in East Germany Following Reunification. American Economic Review, 94, 730-740.

Total Google Scholar citations in 2021: 786

This paper was the first to examine the causal impact between income and life satisfaction in East Germany by exploiting the reunification of Germany. This unanticipated change provides an exogenous and large income increase in East Germany that allows the authors to estimate the causal impact of income on different outcomes. The methodology accounts for fixed individual traits. The authors document that household income increase by 60% between 1990 and 2001, explaining 35–40 percent of the within-covariates variation in life satisfaction. This is a substantial impact.

Luechinger, S. (2009). Valuing air quality using the life satisfaction approach. The Economic Journal, 119, 482–515.

Total Google Scholar citations in 2021: 570

This paper was among the first to use a life satisfaction questions from survey data, combined with administrative data on pollution, to estimate the monetary value of a non-market good, air quality. Luechinger suggested that because the life satisfaction data contain useful information on individuals’ preferences and hedonic experience of public goods, the life satisfaction approach expands economists’ toolbox in the area of non-market valuation, complementing the methods to monetarise non-market good for cost benefit analysis and policy design.

See also the WWP December 2021 survey on the WELLBY cost-benefit methodology

Diener, E (1984). Subjective Well-Being. Psychological Bulletin, 95, 542–575.

Total Google Scholar citations in 2021: 5

Professor Diener is one of the best-known happiness scholars and his article was his first paper in subjective wellbeing. The paper reviews the literature since 1967 and ends by setting the priorities for future research, notably emphasizing the need to combine data with theoretical prepositions and to integrate the different theories.

We lost Professor Diener in 2021. See the July 2021 World Wellbeing Panel survey dedicated to his work and his memory: Is happiness a way of life, shared with others?

Ryan, R. M., & Deci, E. L. (2000). Self-determination theory and the facilitation of intrinsic motivation, social development, and well-being. American Psychologist, 55, 68-78.

Total Google Scholar citations in 2021: 48,388

This paper focuses on psychological health and examines the factors that enhance (rather than undermine) intrinsic motivation and wellbeing: competence, autonomy, and relatedness. In contrast, the paper finds that excessive control, nonoptimal challenges, and lack of connectedness reduces individual initiative and responsibility and leads to distress and ill wellbeing. This paper is very relevant to those individuals that have strong influence on others’ behaviors, e.g. parents and educators, and managers as mentioned by Ryan and Deci.

Ryff, C. D. (1989). Happiness is everything, or is it? Explorations on the meaning of psychological well-being. Journal of Personality and Social Psychology, 57, 1069-1081.

Total Google Scholar citations in 2021: 18,167

This paper uses survey data to operationalize what constitutes positive psychological functioning with six dimensions (self-acceptance, positive relations with others, autonomy, environmental mastery, purpose in life, and personal growth) and empirically estimate its importance on determining life satisfaction and six other measures of wellbeing. This is, a multidimensional model of psychological wellbeing. Ryff argues that these measures of psychological wellbeing represent more enduring life challenges than happiness. Ryff concluded that the most recurrent criterion for positive well-being has been the individual's sense of self acceptance or self-esteem.