Happiness is extremely subjective

An increase in income means an increase in means when analyzing human behaviors by an individual's goals and the means to achieve them. A modest economist does not dare to value one's goals as which objectives can bring more happiness or are more valuable depends on each individual's perspective. Therefore, it's possible to calculate the average income of members in a society but there is no such a concept as their average happiness or aggregate happiness. How can we add or subtract one's happiness?

A rise in the gross domestic product (GDP) or national income does not necessarily mean more happiness. In other words, the size of wealth does not necessarily determine one's happiness. But an increase in GDP or income means more means available to achieve one's goals, which can mean more likelihood to boost one's happiness. As long as the goal remains same, more means cannot mean unhappiness.

Although happiness is an extremely subjective concept, some people develop various calculations such as Gross National Happiness and try to compare the indices by country and income brackets as if they are an objective yardstick. How do they create those indicators? They tend to add to or subtract some items from GDP, with differing weight on certain categories. But there exists no scientific ground to justify the procedures. Therefore, a number of happiness indices can be developed and it's hard to say which one is better.

Ill-devised happiness index may stir up social and political conflicts

If policymakers begin to consider the Gross National Happiness index, the groups who will benefit most from the policy change such as those enjoying more government subsidies will favor the measure and launch a political strife to make it as a major policy goal.

Mises viewed economics as a primary area of praxeology and urged more knowledge about history, psychology, and sociality in order to understand more about the economy. Happiness is apparently a subject that cannot be treated easily. Therefore, other studies should be combined to talk about happiness. Creating a mechanical index can be misleading. We may have to pay more attention to happiness but treating it in such a mechanical way can bring about adverse effects such as political strife. Then, it would harm the people, rather than improve their happiness.

1) For example, see Chosun Ilbo's New Year special feature series, "Koreans, Be Happy in 2011," January 1-18, 2011.

By Kim I-seok, researcher at the Korea Economic Research Institute