Economics of Happiness

US Federal Reserve Chairman Ben Bernanke talked about the Economics of Happiness in a commencement speech at the University of South Carolina on 8th May, 2010.

A few takeaways:

He moves away from the materialistic reasons of happiness as proposed by many economists and suggests the following as things that lead to happiness (off course in addition to materialistic gains):

1.) spending time with friends and family,

2.)getting engrossed in the “activity” you are involved with,

3.)recognising the fact that everything in life can not be under our control.

4.) Remember all the good that happened with you!

He also tries to answer the age old question that we often ask ” Are the people in the poorer countries less happy?” or ” Are the people in the villages less happy than the city people?”

He says that what matters is the relative possession of wealth. So he says,”If I live in a country in which most people have only one cow, and I have three cows, then I will have lots of social status and self-esteem and will thus feel happy. But if everyone around me has a luxury car, and I am hung up on status, I won’t feel very special unless I have both a luxury car and an SUV.”

He ends it off by saying something very interesting “happiness is nature’s way of telling us we are doing the right thing. True. But, by the same token, ephemeral feelings of happiness are not always reliable indicators we are on the right path. Ultimately, life satisfaction requires more than just happiness. Sometimes, difficult choices can open the doors to future opportunities, and the short-run pain can be worth the long-run gain.”

Perhaps, an effort to draw our attention to the fact that the desire to gain immediate proseperity through financial jugglery has led to a fatal crisis for all of us today. He seems to be telling us that it is prudent to postopne immediate happiness for “life satisfaction”!

Read the whole speech here.