Happiness matters: productivity gains from subjetive well-being

This article studies the link between people's subjective well-being, defined as life satisfaction, and productivity in the framework of efficiency analysis. We adopt Data Envelopment Analysis to compute productive efficiency indices using European Social Survey and AMECO data for 20 European countries. While accounting for reverse causality, we find significant efficiency gains when subjective well-being is an input to production. This supports the view that promoting subjective well-being results in higher productivity.