Happiness & Public Policy

Louis Rayo and Gary S. Becker, “Evolutionary Efficiency and Happiness,” Working Paper, University of Chicago.

Abstract. We model happiness as a measurement tool used to rank alternative actions. The quality of the measurement is enhanced by a happiness function that adapts to the available opportunities, a property favored by evolution. The optimal function is based on a time-varying reference point —or performance benchmark— that is updated in a statistically optimal way. Habits and peer comparisons arise as special cases of this process. This also results in a volatile level of happiness that continuously reverts to its long-term mean. Throughout, we draw a parallel with a problem of optimal incentives, which allows us to apply statistical insights from agency theory to the study of happiness.

This looks pretty promising. I’ll comment when I’ve read the paper.