Public Choice (2010) 144: 557–573
DOI 10.1007/s11127-010-9681-y
Happiness and public choice
Bruno S. Frey · Alois Stutzer
Received: 20 April 2010 / Accepted: 9 June 2010 / Published online: 2 July 2010
© Springer Science+Business Media, LLC 2010
Abstract Measuring individual welfare using data on reported subjective well-being has
made great progress. It offers a new way of confronting public choice hypotheses with field
data, e.g., with respect to partisan preferences or rents in the public bureaucracy. Insights
from public choice also help to assess the role of happiness measures in public policy. We
emphasize that maximizing aggregate happiness as a social welfare function neglects in-
centive problems and political institutions while citizens are reduced to metric stations. The
goal of happiness research should be to improve the nature of the processes through which
individuals can express their preferences.
Keywords Economic policy · Happiness · Life satisfaction · Public choice · Social welfare
JEL Classification D60 · D70 · H11 · I31
1 Introduction
The measurement of individual welfare, using data on subjective well-being, has made great
progress. This is reflected by a massive increase in the amount of scholarly work on peo-
ple’s subjective well-being1 and ‘happiness research’ in the media. Our paper discusses
1For surveys of the study of happiness in economics, see Oswald (1997), Frey and Stutzer (2002a, 2002b),
van Praag and Ferrer-i-Carbonell (2004), Layard (2005), Di Tella and MacCulloch (2006), Dolan et al. (2008)
and Frey (2008).
B.S. Frey (

)
Institute for Empirical Research in Economics, University of Zurich, Winterthurerstrasse 30,
8006 Zurich, Switzerland
e-mail: bsfrey@iew.uzh.ch
B.S. Frey · A. Stutzer
CREMA—Center for Research in Economics, Management and the Arts, 4052 Basel, Switzerland
A. Stutzer
University of Basel, Basel, Switzerland

558 Public Choice (2010) 144: 557–573
this development against the backdrop of public choice analysis. We argue that the pos-
sibility of adequately measuring individual well-being offers two avenues for productive
cross-fertilization of research on subjective well-being and public choice. First, direct mea-
sures of individual welfare offer a new way of confronting public choice hypotheses with
field data. Second, insights from public choice help with assessing the new vision—be it
explicit or implicit—of using subjective well-being measures to improve outcomes by using
direct policy interventions to maximize some aggregate happiness measure as a social wel-
fare function. Our discussion suggests that the latter is not a worthwhile approach to pursue;
there are major objections to this approach from a public choice perspective. We present
an alternative view of how the insights gained from happiness research may contribute to
policy-making.
Section 2 sets the stage, outlining recent advances in the measurement of subjective well-
being and naming important advantages of these measures as indicators of individual welfare
over the traditional indicators. In Sect. 3, some illustrations are offered of how hypotheses
of public choice theory can be confronted with evidence in a novel way using data on sub-
jective well-being. The emphasis is on theories predicting rents in the public bureaucracy.
Section 4 assesses happiness maximization from a public choice perspective. We first present
the case in favor of happiness maximization. We then discuss it, using fundamental insights
from social choice theory and add several incentive distortions induced by the happiness
maximization approach. Section 5 outlines an alternative approach for using the insights of
happiness research for policy from a constitutional point of view. Conclusions are drawn in
Sect. 6.
2 Measuring individual welfare
2.1 Conceptual issues
Happiness research has designed several indicators of subjective well-being, relying on dif-
ferent measurement techniques (for a discussion, see Kahneman et al. 1999; Diener 2005;
Kahneman and Krueger 2006): global evaluations of individual life satisfaction, based on
representative surveys; the Experience Sampling Method, which collects information on
individuals’ actual experiences in real time in their natural environments; the Day Recon-
struction Method, which asks people to reflect on how satisfied they felt at various times
during the day; the U (“unpleasant”)-Index, which defines the fraction of time per day that
an individual spends in an unpleasant state; and Brain Imaging, which uses functional mag-
netic resonance imaging (fMRI) to scan individual brain activity for correlates of positive
and negative affects.
There is now wide-spread consensus among scholars that these measures capture rele-
vant information about people’s well-being. This is indicated by the fact that they correlate
well with qualities and behaviors generally associated with happiness. Reliability studies
have found that reported subjective well-being is moderately stable and sensitive to chang-
ing life circumstances (e.g., Ehrhardt et al. 2000; Schimmack and Oishi 2005). Consistency
tests reveal that happy people smile more often during social interactions (Fernández-Dols
and Ruiz-Belda 1995); are rated as happy by friends and family members (e.g., Sandvik et
al. 1993; Lepper 1998) and by spouses (Costa and McCrae 1988); express positive emo-
tions more frequently, are more optimistic, are more sociable and extrovert, and sleep better