Recent Advances in the Economics of Individual Subjective Well-Being

Over the last decades, empirical research on subjective well-being in the socialsciences has provided a major new stimulus to the discourse on individual happiness.Recently this research has also been linked to economics where reported subjective wellbeingis often taken as a proxy measure for individual welfare. In our review, we intend toprovide an evaluation of where the economic research on happiness stands and of threedirections it might develop. First, it offers new ways for testing the basic assumptions of theeconomic approach and for going about a new understanding of utility. Second, it provides anew possibility for the complementary testing of theories across fields in economics. Third,we inquire how the insights gained from the study of individual happiness in economics affectpublic policy.