Contents lists available at ScienceDirect
Journal
of
Behavioral
and
Experimental
Economics
journal homepage: www.elsevier.com/locate/jbee
How
does
happiness
relate
to
economic
behaviour?
A
review
of
the
literature
Tom
Lane
Department of Economics, University Park, University of Nottingham, NG7 2RD, UK
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Article history: Received 30 August 2016 Revised 6 January 2017 Accepted 3 April 2017 Available online 5 April 2017
JEL classification: D03
D64 D81 D9 I31
Keywords: Happiness Subjective wellbeing Behavioural economics Experimental Economics
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Thisarticlereviewsresearchontherelationshipbetweenhappiness(subjectivewellbeing)andeconomic behaviour.Idescribehowexperimentalandnon-experimentalmethodshavebeenused,acrossthesocial sciences,toinvestigatehowhappinessdrives,andisdrivenby,particularbehaviouraltendencies.I con-siderinterpersonalbehaviour(selfishness,trustandreciprocity)andindividualbehaviour(riskandtime preferences).Regardinginterpersonalbehaviour,ageneralconclusionisthathappinessresultsfrom pro-socialbehaviour.Happinessnegativelycorrelateswithselfishnessandpositivelycorrelateswithtrust;in bothcasesthereisstrongerevidencethatthebehaviourisacauseofhappinessthanaconsequenceof it.Individualsalsogainhappinessfrominflictingcostlypunishmentonthosewhohaveharmedthem, althoughbeinghappyreducesthedegreetowhichpeoplearewillingtodoleoutsuchpunishmentin thefirstplace.Regardingindividualbehaviour,therelationshipbetweenhappinessandriskpreferences remainsuncleardespite alarge bodyofresearchonthetopic,whilethere isevidencethathappiness affectstimepreferencesbyreducingimpatience.Inallcases,Idrawdistinctionsbetweenthelong-and short-termrelationshipsbetweenhappinessandbehaviour.
© 2017PublishedbyElsevierInc.
1. Introduction
Thereismuchincommonbetweenbehaviouraleconomics,the field applying psychological insight into humanbehaviour to ex-plain the economic decisions people make, and happiness eco-nomics,thestudywithineconomicsofhappinessandits relation-shipswith other factors. Both are heterodox butincreasingly in-fluential fieldswithin the discipline; both haveproduced impor-tant empirical findings which challenge the received neoclassical wisdomthat individualsare capable of maximisingtheir wellbe-ingwithoutsystematicallymakingmistakes.Thispaperreviews re-searchattheinterfaceofthetwofieldswhichhasattemptedto ad-dresshow economically-relevantbehavioural tendencies relate to happiness.Thisbodyofresearchisinterestedinhowthetendency to behave in specific ways increases or decreases one’s level of happiness,andconverselyhow one’s levelof happinessincreases or decreases the likelihood of one engaging in such behaviours. Inparticular, how doesbehaving selfishly, trustingly, reciprocally, risk-averselyorimpulsivelyaffectone’s happiness, andhow does beinghappyaffectthelikelihoodofonebehavinginsuchways?
Understanding the relationships between happiness and eco-nomic behaviour is of intrinsic interest to academics, across the
E-mail address: [email protected]
social sciences, as well as laypeople. Happiness is a concept of suchfundamentalimportancethatithaspreoccupiedphilosophers and religions for millennia. Happiness, and how it can be max-imised,haslongbeenofinteresttoeconomists,too.Utilityentered economicanalysisasaclosesynonym ofhappiness;althoughthe two concepts later departedfromone another, inrecent decades economists havedeveloped a renewed interest in happinessand waysitcandirectlybemeasured.
Being happy is an importantgoal for most people; according toone view,itistheultimategoalto whichallothersare aimed (Layard, 2011). Understanding the causes of happiness is, there-fore, beneficial to society. Policymakers concerned with helping people enhance their futurehappinesshavean interest in know-ing which typesof behaviour exerta positive hedonic effectand are thereforeworth encouraging. Furthermore,understanding the consequences of happiness is important. There is mounting evi-dence that emotions, including happiness, exert considerable in-fluence on decision-making. Taking this into consideration, be-haviouraleconomists haveinrecentyearsbeenpayingincreasing attentiontothestudyofhappiness.
Thereisnowasubstantialamountofavailableevidenceonhow happiness relates to economic behaviour. The literature is suffi-ciently advancedthat itisworth takingstockby bringing allthis evidencetogether,andsuch isthepurposeofthispaper.Iaimto
summariseaseriesoffindingsofcross-disciplinaryandcross-field interest: to show how behavioural scientists and their method-ologies havecontributedto knowledge onhuman happiness, and how happiness researchers have aided our understanding of hu-man behaviour.1 The research discussed in thispaper is not re-strictedbyacademicdiscipline.Muchoftherecentworkiswithin economicsandbusiness-relateddisciplines,butpsychologistshave been studying the effect of emotions on behaviour for decades (seee.g.Isen,2008).Otherstudiescomefrompoliticalscience, so-ciology, ecology,neuroscience andmedicalsciences. The research discussed is furthermorenot restrictedby the methods it uses;I outline themain research methodsemployed inthis literaturein Section 2,andalsoraiseimportantmethodologicalconsiderations relatingtofindingsastheyarise throughoutthepaper.The litera-turesearchforthispaperwasconcludedinDecember2016.
This paperfocuses onbehaviours which both 1) are of great-estinteresttobehaviouraleconomists,and2)havebeenmost re-searched in relation to happiness.2 I first address interactive be-haviour. Specifically, I consider: selfishness (and by extension its counterpart, generosity), the prioritisation of one’s own material wellbeingoverthatofothers;trustingbehaviour,wherein individ-ualsinvesttime,moneyoreffortonendeavourswhichdependon theassistanceofothers;andreciprocity,theactofpunishingor re-wardingothersforbehaviourwhichhasharmedorbenefitted one-self. I then turn to individual behavioural traits: risk preferences andtimepreferences.Itistruethat someofthesebehavioursare interrelated – forinstance,trustingbehaviour maybe affectedby one’sriskpreferencesandlevelofgenerosity.Nevertheless,this pa-persub-dividesthediscussionintotopicsastheyaregenerally de-finedintheliteratureitself.Inallcases,Ifocusnotonlyon identi-fyingassociationsbetweenhappinessandbehaviouraltendencies, butalsoonattemptingtodiscernthedirectionofcausality.Aware that the causesandeffects ofshort-lived and long-lasting happi-nessmaydiffer(seee.g.KahnemanandRiis,2005),thispaperalso systematicallyhighlightswhetherresearchhaslinkedhappinessto behaviouraltraitsonalong-orshort-termbasis.
Inshort,thispapershowsthathappinessisinverselyrelatedto selfishness;the twomaywell be co-dependent, buttheevidence that selfishness causesunhappinessisstronger thantheconverse (Section3).Trustispositivelycorrelatedwithhappiness,andagain there is more evidence that trust causes happiness than the re-verse (Section 4). Unhappiness enhancesthe degreeto which in-dividualsarewillingtoengageinnegativereciprocitybyinflicting costlypunishmentonthosewhohaveharmedthem; butexacting suchretributionisapparentlybeneficial toone’ssubsequent well-being,demonstratinganegativefeedbackloopbetweenhappiness and negativereciprocity. However, the limited available evidence suggests adifferent relationship betweenhappinessand the
ten-1Note that this paper is not an attempt to review all research at the interface of
behavioural and happiness economics. For instance, it does not discuss studies such as CarterandMcBride(2013) which use subjective wellbeing measures as an al- ternative barometer with which to test findings from behavioural economics. I also do not discuss happiness research which has inferred the existence, in general, of certain behavioural tendencies, such as reference dependence (e.g. Hagerty,2000). Specifically, the focus is on research identifying how happiness affects the likeli- hood of an individual behaving in a particular way, and vice versa.
2One broad area which is certainly of great interest to behavioural economists is
bounded rationality. Behavioural science has identified a wide range of behavioural tendencies resulting from deviations from rationality. However, this paper does not include a section on bounded rationality, because the topic has not yet received suf- ficient research in relation to happiness (beyond the assumption that less rational behaviour reduces happiness through material losses) from which to build a synthe- sis warranting standalone discussion. Some relevant research on overconfidence and time-inconsistency is discussed in the context of risk and time preferences. For re- search on the relationship between happiness and the endowment effect, see Lerner etal.(2004),Linetal.(2006a) and Cavazotteetal.(2009). For research showing happiness is inversely related to preference reversals, see Drichoutisetal.(2010).
dency to engage in positive reciprocity by rewarding those who haveactedtoone’sbenefit,witheachexertingapositiveeffecton theother(Section5).
There is a large literature on the relationship between hap-piness and risk-preferences,but as Section 6 shows it yields in-conclusivefindings,withcompetingschoolsofthoughtcontending thathappinesseitherincreasesordecreasesrisk-aversion.Thislack ofconsensus isexamined andpossibleexplanationsforitare dis-cussed.Thereismoderateevidencethathappinessincreasesone’s patienceover monetary rewards, whichis reviewedin Section 7. Finally, Section 8 concludes; it highlights the important general findingthathappinessappearstoresultfromsociallybeneficial be-haviour,andalsodiscussespossiblefutureresearchdirections.
2. Howresearchershaveinvestigatedrelationshipsbetween happinessandeconomicbehaviour
Forthegreatmajorityofstudiesinthisliterature,happinessis elicited through the self-reports of individuals in questionnaires. Thescientificvalidityofsuchsubjectivewellbeing(SWB) measure-ments isa controversialissue.Iwill not attempttofully address thecontroversyhere(forextensivediscussions,seee.g.MacKerron, 2012;Dieneretal.,2013)butwillbrieflynotethefollowing,in de-fence ofthe use ofSWB: self-reported happinesscorrelates with happinessasjudgedbyobservers(Diener,1984;Pavotetal.,1991; Sandviketal.,1993;SchneiderandSchimmack,2009);italso cor-relateswithsuch objectivevariablesasbrainactivity (Urryetal., 2004),heartrate(Shedleretal.,1993;Steptoeetal.,2005), phys-ical stress (Steptoe etal., 2005), Duchenne smiles (Ekman etal., 1990), suicide (Di Tella et al., 2003) and antidepressant usage (BlanchflowerandOswald,2011),allofwhichareatleastplausibly relatedtohappiness;SWB isreasonablystablewithin individuals over time (Fujita and Diener, 2005; Schimmack andOishi, 2005; KruegerandSchkade,2008;MichalosandKahlke,2010);itpredicts future behaviours such as divorce (Gardner and Oswald, 2006); anditconsistentlyyieldstheoreticallyplausibleresults,suchasthe ubiquitousfindingthathappinessisnegativelyassociatedwith un-employment.
Thispaper is,therefore, written fromthe intellectual position that SWB measures, while imperfect, are worth taking seriously. Occasionally,studiesinthisliteratureusephysicalhappiness mea-sures such asbrain activity (e.g. DeQuervain etal., 2004; Harle etal., 2012) orlevels ofserotonin(Crockettetal., 2013)or corti-sol(Dunnetal.,2010a),insteadoforinadditiontoSWB.However, giventhepredominantuseofself-reportedhappinessinthis liter-ature,forsimplicityIwill hereafter usehappinessandSWB syn-onymously. Note that SWB measures can relate either to imme-diate happiness, i.e.mood(e.g.‘how happyare you rightnow?’), ortolong-termhappiness(e.g.‘how happyare youthesedays?’; ‘howsatisfiedareyouwithyourlife?’).Researchontheshort-term causesandeffects ofhappiness willelicit immediateSWB, while researchon itslong-termrelationshipswithbehaviourswillelicit long-termSWB.
ob-serveactualbehaviour.Note,though,thatsomeexperimentselicit self-reported behaviour, or observe behaviour in economic tasks wherethepayoffsarehypothetical,whiletherearealsosome non-experimentalstudieswhichobserverealbehaviour(e.g.Kligerand Levy,2003,studystockmarketactivity).
Moststudiesusingsurvey-responseornaturally-occurringdata canonlyassertcorrelationratherthancausality,althoughthereare some exceptionswhereresearchers havetakenadvantage of nat-ural experiments (Meier and Stutzer, 2008), lagged independent variables(e.g.Thoits andHewitt,2001), orinstrumentalvariables (e.g. Kamstra et al., 2003; Borgonovi, 2008). Experiments gener-allyhavegreaterpotential toinvestigatecausality.Experimentally investigatingthecausal effectof happinessonbehaviour is com-monly done by exogenously manipulating subjects’ happiness in advanceofbehaviouraltasks,usingmood-inducementprocedures. Thisisoftendone byshowingsubjectsvideoclipsexpectedto ei-therraiseorlowertheir happiness;othermethodsincludeasking subjects to recall or write abouthappy orunhappy experiences. Theeffectiveness ofthe mood-inducement isvalidatedby subse-quentlyasking subjectstoreporttheirimmediatehappiness. Typ-ically, such experiments will use for comparison a control treat-ment in which a neutral mood is induced, although some ex-periments simply employ one induced-happy and one induced-unhappy treatment. Any significant differences in behaviour be-tweentreatmentscanthen beattributedtothedifferentlevels of happinessexogenouslyinducedinsubjects.
Regarding the causal effect of behaviour on happiness, some experiments attempt to assess this by measuring subjects’ self-reportedimmediatehappinessbeforeandafterabehaviouraltask, therebycalculatinghowitchangesoverthecourseofthetask.The changeinhappinesscaneitherbemeasuredwithinsubjects (elic-iting everyone’s SWB twice) or between subjects (eliciting some subjects’SWBbeforehandandsomeafterwards,andmeasuringthe averagedifference).Experimentscanthendiscernwhetherthe in-crease (or decrease) in happiness is greater for individuals who choosetoactonewayoranother.
Interpreting thisasa causal effectofthe behaviour on happi-nessispotentially problematic,however.Subjectsareableto self-selectintobehavingone wayoranother,so differencesin mood-improvementmaybedrivennotbythebehaviouritself,butby un-derlyingdifferencesbetween thosechoosing differentbehaviours. Forinstance,subjectswhochoosetobehavegenerouslymaytend togaingreaterenjoymentfromparticipatinginbehavioural exper-imentsthansubjectswhochoosetobehaveselfishly;thegenerous subjectswouldthereforereport agreatermood-improvement,but thiswould not in fact be caused (wholly)by their generous be-haviour.Whilethisiscertainly apossible sourceof misidentifica-tionofsignificantresults,Iwouldargueitisareasonfortreating suchresultswithcautionratherthandisregard.Absentof theoreti-calargumentsonwhypeoplewhobehaveinonewayshouldhave asystematicallygreaterincidentalcapacityformood-improvement thanthosewhobehaveinanother,greatermood-improvement re-portedby one group is atleast suggestiveof a causal impact on happinessoftheirchosenbehaviour.
A more likely occurrence in such experiments may be the misidentification of null results due to self-selection. This could occurifonebehaviour (A)wouldtendtobring greaterhappiness tomostpeople thanan alternative behaviour (B),butthe minor-ityofindividualsforwhom theopposite isthe casechoosetheir happiness-maximising behaviour (B), and both behaviours there-fore lead to similar changes in the happiness of those choosing them.Indeed,correctly identifyingcausal effects ofbehaviour on happinessusingmethodsofthissortreliesonsomesubjects fail-ingto choose happiness-maximising actions, presumablythrough errorsinaffectiveforecasting(WilsonandGilbert,2005).
Analternativemethodsomeexperimentsuseistorandomly as-signsomesubjectstobehaveinonewayandotherstobehavein another. For instance,Dunn et al.(2008) assigned some subjects tobehaveselfishlyandotherstobehavepro-socially.Thisremoves theself-selection problem,butsimultaneously raisesthe possibil-itythatsubjectswillnotfeelthetrueeffectofabehaviourbecause itisnotmadethroughchoice.Indeed,therearesomebehaviours, suchastrust,thatpeoplecannotmeaningfullybecompelledinto.
Anotherdifficultyexperimentsfaceisinidentifyingtheeffects onbehaviour ofhappinessbeyondthe immediatepresent. Mood-inducement experiments reveal theeffects of short-term fluctua-tionsinhappinessonbehaviour,butitcanbequestionedwhether the effect on one’s behaviour of being in a good mood will be the same asthe effect of beinga generally happy personin the longterm.Oneapproachsome experimentshavetakenisto com-pare the behaviour of clinically depressed (and therefore long-termunhappy) subjectswiththat ofhealthy control participants. These studies infer causal effects ofdepression on particular be-haviours onthebasisofan implicitandperhapsquestionable as-sumptionthatdepressionisanexogenousvariable,andnot some-thingwhichmaybeinfluencedbythebehavioursinquestion. In-terestingly,whentheseexperimentshavefoundsignificanteffects, they have sometimes been in the opposite direction to those of mood-inducementstudies.Assumingthat thebehavioursin ques-tion arenot causes ofdepression, theseinconsistenciesmay sug-gestthat happinessexertsopposite effectsonsomebehavioursin the shortandlong term, orthey mayimplythat clinical depres-sionisaspecialcase, witheffectswhichdonotalwaysgeneralise tounhappybutmentallyhealthypeople.
Similarly,itisdifficultforexperimentstoestablishtheeffectsof behaviouronhappinessinthelongterm.Theycaninvestigatethe immediateeffectbehavinginaparticularwayhasonone’smood; they are unlikely to be able to confirm whether behaving that waythroughoutone’s life hasthe sameeffectonone’slong-term happiness. As a result of thesedifficulties, more is knownabout how economicbehaviour relates toshort-term happinessthan to long-termhappiness.Throughoutthispaper,cleardistinctions are drawnbetweenthetwo.
3. Therelationshipbetweenhappinessandselfishness
Thissectionreviewsevidenceontherelationshipbetween hap-pinessandselfishness. Idefine selfishness astheprioritisationof one’s own materialwellbeing over that ofothers.For readability, I willsometimes also refer to generosity, whichI consider to be theconverseofselfishness.3Notethat thissectiondoesnotcover allaspectsofpro-sociality,whichisabroaderconcept encompass-ingother behaviourssuchastrustandcostly punishment– these otherbehavioursareaddressedinlatersections.
3.1. Correlationalstudies
Theevidencefromsocialsurveysstronglysuggeststhat a neg-ative correlation exists between SWB and selfish economic be-haviour. Dunn et al.(2008) found that, amongst a representative sampleofAmericans,reportedlevelsofspending ongiftsfor oth-ersandoncharitycorrelatedwithSWB.Akninetal.(2013a) gen-eralisedthisresulton aninternationallevel: theytook datafrom the Gallup World Pollin 139 countries, where respondents were
3There may be many different motivations for behaving selfishly or gener-
askedwhethertheyhaddonatedtocharityinthepastmonth. An-sweringyestothisquestionsignificantlypredictedSWBacrossthe whole sample, and also didso within 71 ofthe countrieswhen they were analysed in isolation. The overall effect was qualita-tively large– givingto charityhadthe equivalentimpact to dou-blingone’shouseholdincome– andwasofsimilarstrengthinrich andpoorregions.4 SeparatestudiesinThailand(Pholphirul,2015), China (Jiang et al., 2016) and Finland (Tanskanen and Daniels-backa, 2016) also found happiness correlated with self-reported charitable behaviour. Ferrer-i-Carbonell and Gërxhani (2016) ob-served a negativecorrelation betweenSWBand self-reportedtax evasionin formercommunist countries.5 Apositive link between generosity and happiness was also found by Phelps (2001) – in this case the generosity was not self-professed but elicited by the psychological Thematic Apperception Test. In lab experi-ments, Pulcu etal. (2015) observed less generous charitable giv-ing by subjectswithclinical depressionthan by healthy subjects, Bolle etal. (2014) found stealing in a vendetta game to be neg-atively correlated with happiness, and Joffily et al. (2014) iden-tified a positive correlation betweenhappiness andcontributions in a public goods game, although no significant correlation be-tween happinessandgenerosity in the dictator gamewas found byCharnessandGrosskopf(2001).
Therelationshipextendsalsotoindividuals’useoftime:those who allocate their time to the benefit of other people tend to be happier. From a meta-analysis of 29 studies investigating the relationship betweenhappiness and volunteering in old age, Wheeler et al. (1998) deduced the average elderly person who didnotvolunteerwaslesshappy than70%ofelderlypeoplewho did (controlling for health weakened but did not eradicate this effect). More recent studies using survey data havecontinued to consistently find positive correlations between volunteering and happiness amongst the elderly (Windsor et al., 2008; McMunn et al., 2009; Dulin et al., 2012; Pilkington et al., 2012; Taghian et al., 2012; Becchetti et al., 2016; Tanskanen and Danielsbacka, 2016) and across all ages (Mellor et al., 2008; Tov and Diener, 2009; Brown etal., 2012;Okun et al., 2011; Binder andFreytag, 2013;Binder,2015;Gimenez-NadalandMolina,2015;Matsushima andMatsunaga,2015;BinderandBlankenburg,2016).Furthermore, many studies have identified a positive link between happiness and the extent to which individuals make voluntary efforts to assist colleagues andemployers at work (Organisational Citizen-shipBehaviour); themeta-analysesofOrganandRyan(1995)and Bormanetal.(2001)showedmildpositivecorrelationsacrossthis literature.Ithasalsobeenfoundthathappierpeoplereport spend-ing more time helping others outside of any workplace or for-malvolunteeringenvironment(Becchettietal., 2016;Oargaetal., 2015).
Happinessappears,furthermore,tobepositivelyrelatedto en-vironmentallyfriendlybehaviour,whichgenerallyrequiresthe in-dividualtoforgosometime,effortormoney.Cross-sectional stud-ies, based on surveys which elicit self-reports of
environmen-4A recent study by Diego-Roselletal.(2016), again using international Gallup World Poll data, also estimated a positive correlation between self-reported altru- istic behaviour and SWB, but the effect was of a much smaller magnitude than found in Akninetal.(2013a). In this case the altruism was constructed as an index, based on self-reported volunteering and frequency of helping strangers, in addition to charitable giving.
5While not strictly related to one’s own selfishness, it is interesting to note that an inverse relationship also exists between happiness and one’s tolerance for dishonesty. This has been found by several cross-sectional studies which corre- late SWB with respondents’ reported tolerance for such types of behaviour as cor- ruption, tax fraud and fare-dodging (e.g. Helliwell,2003;deJesus Garciaetal., 2007; James, 2011; Lubian and Zarri, 2011). However, an interesting study by Stavrovaetal.(2013)suggests that the inverse relationship between SWB and toler- ance for dishonesty only exists in countries where virtuous behaviour is the norm.
tally responsible actions, have found this relationship in the US (Brown andKasser,2005),Sweden (Jacob etal., 2009; Kaidaand Kaida,2015),Mexico(Corral-Verdugoetal.,2011),China(Xiaoand Li,2011),Spain(Suarez-Varelaetal.,2014),Australia(Ambreyand Daniels,2016), SouthKorea (Choi,2016), India(Tiwari,2016) and across a diversesample ofcountriesin the World ValuesSurvey (Sulemana,2015a).
While theabove evidence strongly indicates a negative corre-lation between happinessand selfishness, it leaves open the di-rection of causality: does selfishness cause unhappiness, or vice versa?Thisquestionisaddressedinthefollowingsubsections.
3.2.Studiesinvestigatingtheeffectofhappinessonselfishness
In contrast to the correlational studies, which are predomi-nantlybased onthe analysisofsocial survey data,the great ma-jorityofresearchintotheeffectofhappinessonselfishnessis ex-perimental.Adecades-oldliteratureinpsychologyhasconsistently shownthatsubjectsaremorewillingtohelpotherswheninduced intoagoodmood(seee.g.Eisenberg,1991).However,thereisless evidence on whether the causal link from immediate happiness togenerous behaviour holdsinfinancial contexts. What evidence doesexistismixed.
Severalstudieshaveinvestigatedtheeffect ofshort-term hap-piness on selfishness in the dictator game by inducing positive or negativemoods in subjects beforehand.Some have suggested that, in fact, making people happier increases their selfishness. Tan and Forgas (2010) found subjects in a positive mood made more selfish allocations than those in a negative mood; the ef-fectwasconfirmedusingtwodifferentformsofmood-inducement, and was found to be particularly strong when a social norm of selfishnesswaspresentedtosubjects.Asimilar studyby Shuang-hu etal.(2012) yieldedqualitatively similar results.Theseresults arealsoconsistentwithKandrackandLundberg(2014),whorana versionofthedictatorgameinwhichtherecipientwasacharity; relativetothoseinacontroltreatmentwhereaneutralmoodwas induced,subjectsinaninducedsadmoodgavemoremoneyaway (althoughthe difference wasonly significant atthe 10% level);a similar manipulation by Ibanez et al. (2016) found no effect. In contrast, Capra (2004) found subjects in an induced good mood were lessselfish inthe dictatorgame thanthose ina badmood, butthesamplewassmallandtheresultonlysignificantatthe10% level.
However, mood-inducement experiments using different eco-nomic games have had a greater tendency to find happiness makessubjectslessselfish.Kirchsteigeretal.(2006)foundsecond movers in the gift-exchange game were more generous, control-lingforthebehaviour ofthefirstmover, wheninducedinto pos-itive moods than into negativemoods. Capra et al.(2010) found subjects induced into a good mood tended to overbid in an auction setting relative to those induced into a neutral mood. Hertel et al. (2000) found inducing a good mood led to less free-riding in a subsequent public goods game than inducing a bad mood, although only when a social norm of coopera-tiveness was presented to participants. In another public goods game,DrouvelisandGrosskopf(2016)foundsubjectswithinduced happiness contributed more than subjects with induced anger.6 HertelandFiedler(1994),meanwhile, foundnosignificantoverall effectofmood-inducementonfreeridinginasocialdilemma,only thattheextentoffreeridingvariedmoreamongsthappysubjects thanamongstunhappysubjects.
6As the comparison in this study is between subjects induced into happy and
Itisthereforeimpossibletoconcludewhateffectfluctuationsin short-termhappiness should be expectedto haveon selfish eco-nomic behaviour.The contrasting resultsbetweendictator games andtheother typesofeconomicexperimentcitedinthis subsec-tionsuggestelementsofthegame-settingmaydetermine the di-rectionoftheeffect.Dictatorgames differfromtheother experi-mentsinthattheyareparticularlysimpleenvironments,involving interactionwithonlyoneotherperson,whoispassive.
Moreover,theeffectofshort-termhappinessonselfishnessmay beverydifferentfromtheeffectoflong-termhappiness.Thelatter hasrarelybeen investigated.Konow andEarley(2008) addressed thequestion by runninga dictator game; instead ofexogenously influencing moods beforehand, they elicited subjects’ SWB relat-ingboth to theimmediatepresentandto thestate of their lives ingeneral.Althoughdictators’long-termSWBcorrelatedpositively withtheir generosity, their immediate SWB did not, which sug-gestedthatgreaterhappinesswasnotdirectlycausinggreater gen-erosity.Instead, psychological wellbeing (definedas a setof psy-chologicallyhealthy,orself-actualising,personalitycharacteristics) emerged asa plausibledeterminant of both long-term SWB and generosity(however,theirexperimentwasunabletotestwhether psychological wellbeing is itself boosted by generous behaviour). Theirresults were largely replicated by Koch (2015). Beyondthe lab,the effectoflong-termhappinessonextremegenerositywas testedbyBrethel-HaurwitzandMarsh(2014):theyfoundregional SWBlevels predictedregional kidney donation rates, andargued thattheextremerarityofkidneydonationmeantreversecausality wasunlikely.
3.3.Studiesinvestigatingtheeffectofselfishnessonhappiness
Dunn etal.(2008)measuredtheSWBofemployeesbefore re-ceivinga bonus andagaintwo months later. The wayemployees spent the bonus affected their SWB atthe second measurement, withthosespendinggenerously(onothersandcharity) experienc-ingthegreatestimprovementrelativetothefirstmeasurement.To address the possibilityof self-selection driving theseresults (see Section2),theauthorsalsorananexperimentwheresubjectswere compelledtospend moneyeitherselfishly orgenerously;the im-provement in SWB was found to be greater for those forced to spendgenerously. Interestingly,theauthorsfound evidenceof af-fectiveforecastingerrors:afurthersetofimpartialparticipants in-correctlyguessedthatthesubjectsassignedtobeselfishwouldbe madehappierthanthesubjectsassignedtobegenerous.
In a similar experiment Geenen et al. (2014) replicated the finding that subjects assigned to spend money generously expe-rienceda greater happinessgain than those assignedto spendit selfishly,withtheadditionaldiscoverythatthisheldtruewhether themoneywasreceived asawindfall oraspaymentforeffortin a task.In further relatedexperiments, Akninetal. (2013a, 2015) confirmedthe effectheldtrueacross divergentcultures:amongst subjectpoolsinCanada,SouthAfricaandVanuatu,beingassigned to buygoods for others always tended to boost SWB morethan beingassignedtobuythemforoneself.7 Akninetal.(2012,2015) alsofoundtheeffectintoddlersinCanadaandVanuatu:being as-signedtogiveawaytreatsmadethemhappierthanbeingassigned tokeep them (accordingto their facial expressions as judgedby observersblindtotheexperimentalhypotheses).
AsmentionedinSection2,subjectsassignedtobehaveina par-ticularwaymaynotexperiencethefullhedonicimpactoftheir ac-tionsthattheywouldhaveiftheyhadcarriedthemoutbychoice.
7In Akninetal.(2013a), they also primed subjects in Canada, Uganda and India to remember recent instances in which they had spent money either on themselves or on others, and then elicited their happiness; in both countries, greater happiness was elicited amongst those recalling generous actions.
Inthecaseofthisgroupofexperiments,thisisnotagoodreason toquestiontheir findingofa positiveeffectofgenerosityon hap-piness.One wouldexpect generousindividualsto experienceless warmglowwhenthegenerosityisforced,8 andselfishindividuals toexperience lessguiltwhen theselfishness isforced, so the re-sultthatgenerositycauseshappinessismorelikelytobeinspite oftheassignmentmethodratherthanbecauseofit.
While the aforementioned experiments have demonstrated a negativeeffectofselfishnessonhappiness,rathermoremixed ev-idenceisprovided bydictatorgames whichelicitsubjects’ happi-ness immediately before and after making distributive decisions. Dunn etal. (2010a) didfind the negativeeffectof selfishness on happiness: relative to generous players, selfish dictators experi-enced a negative mood change; they also reported feeling more shame and experienced raised cortisol (i.e. stress) levels. Aknin et al. (2013a,b) also found the effect, although only under qual-ified circumstances: generous dictators experienced a happiness gain relative to selfish dictators, but only when they personally interacted with their recipient.9 A qualified effect was likewise found by Bischoff and Krauskopf (2015): ina dictator gamewith therecipientacharity,generositypositivelypredictedsubjects’ im-provementinhappiness,butonlywhendistributivedecisionswere madeindividuallyratherthaningroups.
On the other hand, Konow and Earley (2008) and Koch (2015) found players experienced similar levels of mood-improvement whether they acted selfishly or generously. Konow (2010) found selfish dictators experienced greater mood-improvement than generous dictators when the recipient was a student, while the reverse was the casewhen the recipient was a charity.Taking a slightlydifferent approach,Berman andSmall (2012) asked subjects to report their enjoyment from playing a dictator game; they found no significant difference between the reported enjoyment of those who kept the endowment versus those who gaveit to charity. Althoughthese fourstudies do not supportacausaleffectofgenerosityonhappiness,onlyoneresult of Konow (2010) directly refutes it. The rest of the results are inconclusive,andsuchnullfindings ontheeffectofbehaviour on moodcanbetheresultofself-selection(seeSection2).
However, the latter four studies (Konow and Earley, 2008; Konow, 2010; Berman and Small, 2012; Koch, 2015) all yield a furtherinterestinginsight.Additional treatmentswherethe dicta-torswere forcedtobehaveselfishlyledtohigherlevels of mood-improvementthanwereexperiencedbydictatorswhochoseeither tobe selfishorgenerousintheregular game.Thissuggeststhere isahedoniccostfromhavingtochoosebetweenselfishand gener-ousbehaviour,whichBermanandSmall(2012) demonstratedwas not theresultofhavingtomakea choiceingeneral. Thisfinding maybe reconciled withthe overall positive relationshipbetween generosityandhappinessonthebasisthat inordinarylife people rarelyfacesituationswhereselfishnessistheonlyoption.
Overall, then, the balance of experimental evidence supports the argument that financial generosity leads to increased
hap-8In fact, this is empirically supported by Harbaugh et al. (2007), who found sub- jects reported greater happiness from allocating money to charity by choice than by command, with the difference also reflected in the levels of neural activity in re- ward centres of subjects’ brains. On the other hand, BermanandSmall(2012)found no difference in happiness between those who voluntarily gave to charity and those who were forced to do so.
piness. Experiments have also uncovered evidence of a positive causal effect on happiness of generosity in terms of one’s time andeffort.Instructing,ornudging,subjectstoperformregularacts of kindnessover a periodof days(Buchananand Bardi,2010) or weeks(Lyubomirskyetal.,2005;Layousetal.,2016;Nelsonetal., 2016) has been shown to increase their SWB, relative to that of controlsubjects.
Sofar theevidencepresentedinthissection relatestothe ef-fect ofselfishnesson happinessintheshortterm(atthe longest, Dunnetal.,2008,consideratwo-monthtime-period).However,a fewstudiesusingsurveydatahaveproposedanegativecausal ef-fect ofselfish behaviour on happinessin the long term. Exploit-ing the natural experiment of German reunification, Meier and Stutzer (2008)discoveredthat EastGermans who,duetosocietal restructuring, losttheopportunity tovolunteersuffered adecline intheirSWB.Anotherapproachhasbeentousepanelregressions withlaggedindependent variables.Employingsuch methods,Van Willingen(2000),ChoiandKim(2011)andKahanaetal.(2013)all found past levels of volunteering predicted present happiness; ChoiandKim(2011)alsofoundpastlevelsofcharitablegiving pre-dicted presenthappiness. Meanwhile, Borgonovi(2008)used reli-gious fragmentationwithin theUSasan instrumental variableto show(religious)volunteeringhadapositivecausalimpacton long-termhappiness.
3.4. Studiesfindingbi-causalitybetweenselfishnessandhappiness
Twostudieshavefoundselfishness andhappinesstobe mutu-allydependent.ThoitsandHewitt(2001)foundpastlevelsof vol-unteeringpositivelypredictedpresenthappiness,whilepastlevels ofhappinessalsopositively predictedpresentlevels of volunteer-ing.BoenigkandMayr(2015)performedCohen’sPathAnalysison Germansocialsurveydata,andconcludedthathappinessand char-itable giving each positively influenced the other.Their method-ology allowed them to comparewhich directionofcausality was stronger, andtheir finding wasthat happiness hadthedominant causal effecton generosity.This contrasts tothe bulk ofthe evi-dence surveyedabove, whereina positive effectof generosityon happinesshas oftenbeen found whileinconclusive findings have been maderegardingtheeffect ofhappinessongenerosity.Note, however,that mostoftheevidencesurveyedrefers toshort-term happiness, while Boenigk andMayr(2015) consider happinessin thelongterm.
Conclusion 1. Thereis clearevidenceof anegative relationship be-tweenhappiness andselfishness. Regardingthedirectionofcausality,
selfishness appears to cause greater unhappiness in the short term,
and thereis growing evidencethatthis alsoholdsin thelong term. Thecausaleffectofhappinessonselfishnessislessclear:evidenceon the effect ofshort-term happiness on selfishnessis mixed, butthere is moderateevidenceofanegative effectoflong-termSWBand psy-chological wellbeing on selfishness. The literature is summarised in
Table1.
4. Therelationshipbetweenhappinessandtrust
Thissectionaddressestherelationshipbetweenhappinessand trust.Strictlyspeaking,trustisnotabehaviourbutabelief‘inthe reliability, truth,orabilityofsomeoneorsomething’(Oxford Dic-tionaries, 2016). Nevertheless,it isreasonably assumedthat from this belief follows trusting behaviour, wherein individuals invest time, moneyoreffortonendeavours whichdepend onthe assis-tance ofthosethey trust. Therefore,whilethe trustingbehaviour elicitedbytheexperimentaltrustgameisdifferentfromthetrust
elicitedinsocialsurveys,itisexpectedthattheformeristhe con-sequenceofthelatter.10
4.1. Correlationalstudies
An established finding in the happiness literature is that an individual’s long-term SWB positively correlates with their level of generalised trust – that is, the extent to which they be-lieve people in general can be trusted.11 This relationship has been found in the analysis of data from the World Values Sur-vey (Bjornskov, 2003; Helliwell, 2003; Bjornskov, 2006; Tov and Diener, 2009; Elgar et al., 2011; Churchill and Mishra, 2016), the Gallup World Poll (Helliwell and Wang, 2011), the Euro-pean Values Study (Klein, 2013), the European Social Survey (Portela et al., 2013; Helliwell et al., 2014; Rodriguez-Pose and von Berlephsch, 2014), social surveys in the US (Brehm and Rahn,1997), Japan(MatsushimaandMatsunaga, 2015;Yamamura etal.,2015;Kanai,2016;Oshio,2016),China(Yipetal.,2007), Tai-wan(Chang,2009),Thailand(RukumnuaykitandPholphirul,2016), Spain (Pena-Lopez et al, 2016), Serbia (Jovanovic, 2016), Italy (Zanin,2016)andGhana(Sulemana,2015b),andasurveyof Amer-ican high school seniors (Rahn and Transue, 1998). Using Euro-barometerdata,Hudson(2006)alsofoundpositivecorrelations be-tweenSWBandtrustinsuch institutionsasgovernments,central banks,police,bigbusiness,theUNandthelaw.Severalsubsequent studies have also found trust in institutions to be positively as-sociated with happiness (Helliwell and Wang,2011; Klein, 2013; Portelaetal.,2013;Helliwell etal., 2014;Rogriguez-Poseandvon Berlephsch,2014;Sulemana,2015b).12
4.2.Studiesinvestigatingtheeffectofhappinessontrust
Two experiments have used mood-inducement to investigate thecausaleffectofshort-termhappinessonthebehaviouroffirst movers in the trust game. Mislin et al. (2015) found that hap-pierparticipantsweremoretrustingthanthoseinaneutralmood. However, thiswasonlythecasein onecondition, wherethe po-tentialgainsfromtrustingwere low;they didnot behave signifi-cantlydifferentlyintheother conditionwherethepotentialgains fromtrustingwere high. Capra (2004), meanwhile, foundno dif-ference inthebehaviour ofhappyandsadfirst movers, although theexperimenthadasmallsample.
Twofurtherexperimentshaveusedmood-inducementinorder tomeasurethe causaleffectofshort-term happinessonsubjects’ self-reported levels of trust. Dunn and Schweitzer (2005) found participantsinahappymoodreportedfeelinghigherlevelsoftrust
10 Trusting behaviour, as defined in this paper, is conceptually different from gen- erosity. Trust has potential material rewards for oneself, if those one trusts turn out to be trustworthy, whereas the material rewards of generosity only accrue to others. Decomposing trusting behaviour is tricky, however. Generosity can be one motiva- tion behind it; one’s preference over risk can be another. This paper reviews trust in isolation from these other behavioural tendencies because it is generally treated as a distinct topic within the literature.
11 The standard question for eliciting generalised trust, used by the World Values Survey, the European Values Study, the European Social Survey and the US Gen- eral Social Survey, is: ‘Generally speaking, would you say that most people can be trusted, or that you can’t be too careful in dealing with people?’ Note that the inter- pretation of ‘can be trusted’ is left up to the respondent. Some surveys build a trust index from multiple items, which include the question of whether people can be trusted in general as well as more specific questions – for instance, one question in the Taiwanese Survey of Social Development Trends used by Chang(2009) is ‘Do you think that most people would try to take advantage of you if they got a chance?’
12 To measure trust in institutions, Eurobarometer asks: ‘For each of the following
Table1
Summary of the relationship between happiness and selfishness.
Correlation between happiness and selfishness
Topic Result found Studies
Correlation(shortterm) Negative correlation
Bolleetal.(2014);Joffilyetal.(2014)
Correlation(shortterm) Nocorrelation CharnessandGrosskopf(2001)
Correlation(longterm) Negative correlation
Akninetal.(2013a);AmbreyandDaniels(2016);Becchettietal. (2016);Binder(2015);BinderandBlankenburg(2016);Binder andFreytag(2013);Bormanetal.(2001);Brownetal.,(2012); BrownandKasser(2005);Corral-Verdugoetal.(2011);Choi (2016);Diego-Roselletal.(2016);Dunnetal.(2008);Dulinetal. (2012);Ferrer-i-CarbonellandGërxhani(2016);Gimenez-Nadal andMolina(2015);Jacobetal.(2009);Jiangetal.(2016);Kaida andKaida(2015);Koch(2015);KonowandEarley(2008); MatsushimaandMatsunaga(2015);McMunnetal.(2009); Melloretal.(2008);Oargaetal.(2015);Okunetal.(2011); OrganandRyan(1995);Phelps(2001);Pholphirul(2015); Pilkingtonetal.(2012);Pulcuetal.(2015);Suarez-Varelaetal (2014);Sulemana(2015a);Taghianetal.(2012);Tanskanenand Danielsbacka(2016);Tiwari(2016);TovandDiener(2009); Wheeleretal.,(1998);Windsoretal.(2008);XiaoandLi(2011)
Correlation(longterm) Nocorrelation CharnessandGrosskopf(2001)
Effectofhappinessonselfishness Effectofhappinesson
selfishness(shortterm)
Negativeeffect DrouvelisandGrosskopf(2016);Herteletal.(2000);Kirchsteiger etal.(2006);Capra(2004);Capraetal.(2010)
Noeffect HertelandFiedler(1994);Ibanezetal.(2016)
Positiveeffect Shuang-huetal.(2012);TanandForgas(2010);Kandrackand Lundberg(2014)
Effectofhappinesson selfishness(longterm)
Negativeeffect Brethel-HaurwitzandMarsh(2014);ThoitsandHewitt(2001); BoenigkandMayr(2015)
Noeffect Koch(2015);KonowandEarley(2008)
Effectofselfishnesson happiness
Effectofselfishnesson happiness(shortterm)
Negativeeffect Akninetal.(2012,2013a,b, 2014, 2015); Bischoff andKrauskopf (2015);BuchananandBardi(2010);Dunnetal.(2008,2010a); Geenenetal.(2014);Konow(2010);Layousetal.(2016); Lyubomirskyetal.(2005);Nelsonetal.(2016)
Noeffect BermanandSmall(2012);Koch(2015);KonowandEarley(2008)
Positiveeffect Konow(2010)
Effectofselfishnesson happiness(longterm)
Negativeeffect BoenigkandMayr(2015);Borgonovi(2008);ChoiandKim(2011); Kahanaetal.(2013);MeierandStutzer(2008);Thoitsand Hewitt(2001);VanWillingen(2000)
towardsspecific acquaintances thandid thosein a sadmood, al-though this depended on the method used to induce emotions: merelyasking subjectsto rememberhappyorsadeventsdidnot leadtotreatmentdifferences,butaskingthemtowriteaboutthem did.LeiandLu(2014) foundnosignificanteffectofinducing pos-itivemoodonthelevelsoftrustChinesesubjectsreportedfeeling towardspoliticians.
There is, therefore, tentative evidence that trust flows from short-termpositive fluctuationsinhappiness. Thecausal effectof long-termhappinessontrustislessclear.Koch (2015)foundthat thedecisiontotrust inasequential prisoner’sdilemmawas pos-itively predicted by long-run SWB, but was unrelated to short-runSWBimmediatelybefore playingthe game;acausal effectof SWBontrustingbehaviourwasthereforeunlikely.Aswithhisand KonowandEarley’s(2008)research ongenerosity,a plausible in-terpretationofKoch’s(2015) resultswasthat long-termSWBand trustingbehaviourwerebothdeterminedbypsychological wellbe-ing(whetherpsychologicalwellbeingitselfisunderpinnedbytrust couldnotbetested).
Mellick (2014) ran a trust game where the first movers were teenaged girls suffering from depression – a group of people known to have very low levels of SWB in the long term. They found the depressed subjects were in fact more trusting than a healthycontrolgroup.Moreover, thesubjectswithsevere depres-sion were more trusting than those with milder forms. Another experiment by Unoka et al. (2009), which used a procedurally similartrust game,foundno significantdifference intrusting
be-haviourbetweendepressedandhealthyadults.Nevertheless,while reversecausalitycannotberuledout(seeSection2),thefindingof Mellick (2014) could be interpreted asimplying a negativeeffect oflong-termhappinessontrustingbehaviour.Anotherexplanation couldbethatdepressionisaspecialcase– thatdepressed individ-ualsbehavedifferentlyfromthosewhoarehealthybutunhappy.
4.3. Studiesinvestigatingtheeffectoftrustonhappiness
Table2
Summary of the relationship between happiness and trust.
Correlation between happiness and trust
Topic Result found Studies
Correlation(longterm) Positivecorrelation Bjornskov(2003,2006); Brehmand Rahn(1997);Chang(2009);Churchill andMishra(2016);Elgaretal. (2011);Helliwell(2003);Helliwell andWang(2011);Helliwelletal. (2014);Hudson(2006);Jovanovic (2016);Kanai(2016); Klein(2013); MatsushimaandMatsunaga(2015); Oshio(2016);Pena-Lopezetal. (2016);Portelaetal.(2013);Rahn andTransue(1998);Rodriguez-Pose andvonBerlephsch(2014); RukumnuaykitandPholphirul(2016); Sulemana(2015b);TovandDiener (2009);Yamamuraetal.(2015);Yip etal.(2007);Zanin(2016)
Nocorrelation Unokaetal.(2009)
Negativecorrelation Mellick(2014)
Effectofhappinessontrust
Effectofhappinessontrust(shortterm) Positiveeffect DunnandSchweitzer(2005);Mislin etal.(2015)
Noeffect Capra(2004);LeiandLu(2014)
Effectofhappinessontrust(longterm) Noeffect Koch(2015)
Effectoftrustonhappiness
Effectoftrustonhappiness(shortterm) Positiveeffect BecchettiandDegliAntoni(2010); Koch(2015)
Effectoftrustonhappiness(longterm) Positiveeffect Bjornskov(2008);Kuroki(2011)
collectivelysuggestiveofacausalrelationshiprunningfrom trust-ingbehaviourtohappinessinboththeshortandlongterm.
Conclusion 2. There is clearevidence ofa positive relationship be-tween happinessandtrust.Theevidencethattrustcauses happiness
is strongerthan the converse. Two experiments suggest trust has a
positivecausaleffectonshort-termhappiness;twonon-experimental studiesalsoidentifyapositivecausaleffectoftrustonlong-term hap-piness.Thecausaleffect ofshort-termhappinessontrustisfound to beeitherpositiveornull;theeffectoflong-termhappinessontrustis unclear.TheliteratureissummarisedinTable2.
5. Therelationshipbetweenhappinessandreciprocity
Thissectionaddresseshowhappinessrelatestoone’stendency to engage in reciprocal behaviour. I separately consider negative reciprocity, the act of punishing others forbehaviour which has harmedoneself,andpositivereciprocity,theactofrewarding oth-ersforbehaviour whichhasbenefited oneself.Inallcasestheact ofpunishingorrewardingisatamaterialcosttotheprotagonist.13
5.1. Studiesinvestigatingtheshort-termeffectofhappinesson reciprocity
The evidencefromseveralmood-inducementstudies revealsa clear consensus that unhappiness,in theshort term, makes peo-ple more willing to engage in negative reciprocity through the useofcostly punishment.Thishasbeen repeatedlydemonstrated in ultimatum games. Forgas and Tan (2013) found responders in
13Another related behaviour is third-party punishment, the act of punishing oth- ers for behaviour which has harmed third parties but not oneself. There has been scarce research on the relationship between third-party punishment and happiness, and so far it has not yielded significant results. Crockettetal.(2013) found deplet- ing participants’ serotonin levels had no significant effect on third-party punish- ment in a dictator game; Koch(2015) did not identify strong correlations between SWB and punishment in either of two third-party punishment games.
sadmoodswere more likelythan thosein happymoods to pun-ishunfair offers by rejecting them. HarleandSanfey (2007),and Liuetal.(2016),foundrejectionratesforunfairofferswerehigher for responders in sad moods than for those in neutral moods, whileRiepletal.(2016) foundthey werelower forrespondersin happymoods than forthose in neutralmoods, andAndradeand Ariely (2009) found they were lower for responders in happy moodsthan forthoseinangry moods.In thepublicgoods game, meanwhile,DrouvelisandGrosskopf(2016)foundinducing happi-nessledtolowerpunishmentlevelsthaninducinganger.1415
Two studies have demonstrated plausible neural explanations forthecausaleffectofunhappinessonthewillingnesstoengagein negativereciprocity.Harleetal.(2012),whoreplicatedthefinding thatultimatumgamerespondentsininducedsadmoodspunished morethanthoseinneutralmoods,showedthatunfairoffers trig-geredgreateractivityintheanteriorinsulaandanteriorcingulate cortex – brain sections associated withaversive emotional states andcognitive conflict – for sad respondents,and greater activity intheventralstriatum – associatedwithrewardprocessing– for respondentswhowerenotsad.Crockettetal.(2013),who manipu-latedserotoninlevelsinparticipantsbeforeplayingtheultimatum game,found those withdepletedserotonin (i.e. lower happiness)
14 As the studies by Andrade and Ariely (2009) and Drouvelis and
Grosskopf (2016) compare behaviour between those with induced happiness and those with induced anger, it is uncertain whether the stronger negative reciprocity is caused by lower happiness or greater anger. Given that anger is likely to be a close correlate of unhappiness, the studies are at least suggestive of an effect of happiness, particularly as this would be consistent with the results of the other studies listed in this paragraph, which do not induce anger but find an effect of happiness.
15 Experiments by Bosman andvanWinden (2002), Ben-Shakharetal.(2007),
hadgreater activityin the dorsalstriatum andwere correspond-inglymorelikelytorejectunfairoffers.16
Itisunclearwhethertheshort-termeffectofhappinesson neg-ativereciprocitygeneralises topositivereciprocity.Whatlittle ev-idenceexistssuggestsitdoesnot.Kirchsteigeretal.(2006)found thatsecond movers in thegift-exchangegame whohadbeen in-ducedintoabadmood,whiletendingtobe moregenerous,were relativelynon-reciprocal.Thatis,theyconditionedtheir moveson thebasisofthefirstmovers’behaviourtoalesserextentthandid secondmoverswhohadbeeninducedintoagoodmood.
5.2.Studiesinvestigatingtheshort-termeffectofreciprocityon happiness
Thereissomeevidencethatengaginginnegativereciprocityby inflictingpunishment,andevenhavingavailable theoptionto do so,canbring individualshappiness. BrandtsandRivas (2009)ran a public goods experimentwhere the rules ofthe game allowed eithernopunishment, weakpunishment orharshpunishment of free-riders.SWBwasmeasuredaftertheexperiment.After control-lingformaterialpayoffsandtheextenttowhichtheyused punish-ment,subjectswerefoundtobehappiestinthesettingwithharsh punishmentavailable.Although itdidnot fullyexplain the bene-fitsoftheavailabilityofpunishment,anindividual’suseof punish-mentwasalsofoundtopredicttheirSWB.Whilereversecausality – that happier subjects punished more – is possible, this would beinconsistentwiththeevidenceabovethatshort-termhappiness tendstoleadtolessernegativereciprocity.
A plausible neural mechanism by which negative reciprocity canleadtohappinesswaspresentedbyDeQuervainetal.(2004). Theyranatrustgameinwhichthesenderhadtheoptionto pun-ishtherecipientfordefecting,andfoundactivationofthesender’s dorsalstriatum – a brain reward centre – was correlated to the amount they spent on punishment,and also wasstronger when punishment materially harmed the recipient than when it was merelysymbolic.
Some weaker evidence on a positive effect of negative reci-procityonhappinesscomesfromPfisterandBohm(2012). Ultima-tumgameresponderswhorejectedoffersexperiencedan improve-ment in their reported satisfaction from making their decision, whileresponderswhoacceptedoffersdidnot.Thisdoesnotshow, however,that rejecting unfair offers should in general maximise one’shappiness,assubjectswhowereinitiallymostunhappyasa resultofreceivingtheunfair offermayhaveself-selected into re-jectingit.
There is also evidence that positive reciprocity may be a source of happiness. In Koch (2015), second movers in the trust gamewhodidnotrewardthetrustorexperienceddeteriorationin their moods,whereas those who actedtrustworthily experienced a small improvement (although, as discussed in Section 2, self-selection could drive this result). In another trust game experi-ment,BecchettiandDegliAntoni(2010)foundnoeffectofsecond movers’trustworthinessontheirmoodchange.
5.3.Studiesinvestigatingthelong-termrelationshipbetween happinessandreciprocity
Thelong-termrelationshipsbetweenhappinessandreciprocity, bothpositive and negative, areunclear, although severalrelevant studiesexist.The directionof causalityassumedinallcases isof
16The authors concluded the stronger negative reciprocity by those with depleted
serotonin was driven by a differential in the desire for retaliation rather than in the perception of how fair a given offer was, as serotonin levels did not predict fairness ratings subjects attributed to offers.
long-termhappinesson behaviour,although empiricallynonecan ruleoutreversecausality.
Regarding negative reciprocity, Koch (2015) found a nega-tive relationship between long-term SWB (according to some measures) and the rejection of unfair ultimatum game of-fers. Dunn et al. (2010b) found the reverse: subjects with higher long-term SWB were more likely to reject unfair offers. Riepl et al. (2016), however, found no significant association be-tween long-term SWB and rejection behaviour. Further studies have usedclinically depressed subjects.Harle etal. (2010) found that depressedindividualswere morewilling toaccept unfair of-fers than healthy control subjects, but similar experiments by Destoop et al. (2012) and Gradin et al. (2015) found no signifi-cantrelationshipbetweendepressionandrejectionbehaviour.Both McClureetal.(2007)andSorgiandvan’tWout (2016)alsofound negativereciprocitynottosignificantlydifferbetweenhealthyand depressed players in repeatedprisoner’s dilemmas. In summary, then,twostudiesfoundlong-termhappinesswasnegatively corre-latedwithpunishment,onestudyfound theywerepositively cor-related, andfivefound nosignificantrelationship.Ifthesestudies are correct inassuming they are measuring the causal effects of happinessonnegativereciprocity,thentheprobableconclusionis that thewell-establishednegativeeffectofhappinessonnegative reciprocityintheshorttermdoesnotholdinthelongterm. How-ever, ifthere issome reversecausality, the short-andlong-term effects of happinesson negative reciprocity may not be at odds, giventheevidencethatnegativereciprocityraiseshappinessinthe shortterm.Thatis,theabsenceofalong-termcorrelationbetween happinessandnegativereciprocitycould be theresultofa nega-tivefeedbackloopbetweenthetwo.
Evidence from research on depression suggestsa negative re-lationship between long-term happiness and positive reciprocity. In repeated prisoner’s dilemmas, McClure et al. (2007) and Sorgiandvan’tWout(2016)foundthatdepressedindividualswere more likely than healthy individuals to engage in positive reci-procity. The same wasfound forbehaviour inthe trust game by Cacedaetal.(2014)andOngetal.(2016),althoughintheformer studyonlyfor malesandnot forfemales. These arethe opposite effectstothoseidentifiedbetweenshort-termhappinessand pos-itivereciprocityintheprevioustwosubsections.Onepossible ex-planationforthedisparityisthatthelong-termrelationshipstruly differ from the short-term; another is that the behaviour of de-pressedpeopledoesnotgeneralisetothatofunhappybuthealthy individuals.
Conclusion3. Short-termunhappinessleadstogreaternegative reci-procity.Conversely,however,engaginginnegativereciprocityappears toincreaseone’sshort-termhappiness.Therelationshipbetween long-termhappinessandtheuseofnegativereciprocityisunclear.Thereis someevidenceofabi-causalpositiverelationshipbetweenshort-term happinessandtheuseofpositivereciprocity;evidence,however, sug-gestsa negative relationshipbetween long-termhappinessand posi-tivereciprocity.TheliteratureissummarisedinTable3.
6. Therelationshipbetweenhappinessandriskpreferences
Table3
Summary of the relationship between happiness and reciprocity.
Relationship between happiness and negative reciprocity
Topic Result found Studies
Correlation(shortterm) Positive correlation
BrandtsandRivas(2009)
Nocorrelation BosmanandvanWinden(2002); Ben-Shakharetal.(2007)
Negative correlation
HopfensitzandReuben(2009); Hennig-Schmidtetal.(2016)
Correlation(longterm) Negative correlation
Koch(2015)
Nocorrelation Destoopetal.(2012);Gradinetal.(2015); McClureetal.(2007);Riepletal.(2016)
Positive correlation
Dunnetal.,(2010b);Harleetal(2010)
Effectofhappinessonnegative reciprocity(shortterm)
Negativeeffect AndradeandAriely(2009);Crockettetal. (2013);DrouvelisandGrosskopf(2016); ForgasandTan(2013);Liuetal.(2016); Harleetal.(2012);HarleandSanfey(2007); Riepletal.(2016)
Effectofnegativereciprocityon happiness(shortterm)
Positiveeffect DeQuervainetal.(2004);PfisterandBohm (2012)
Relationshipbetweenhappinessandpositivereciprocity
Topic Resultfound Studies
Correlation(longterm) Negative correlation
Cacedaetal.(2014);McClureetal.(2007);Ong etal.(2016);Sorgiandvan’tWout(2016)
Effectofhappinessonpositive reciprocity(shortterm)
Positiveeffect Kirchsteigeretal.(2006)
Effectofpositivereciprocityon happiness(shortterm)
Positiveeffect Koch(2015)
Noeffect BecchettiandDegliAntoni(2010)
Mood Maintenance Hypothesis (MMH) (Isen and Patrick, 1983) suggestspositive moods resultinrelatively risk-averse behaviour. Boththeoriesenjoy theempiricalsupportofnumerousstudiesof differenttypes.
Earlier literature in this area consisted mostlyof experiments which induced moods in subjects before asking them to make hypothetical decisions involving risk. Such studies to have found support for AIM include Isen and Patrick (1983), Deldin and Levin (1986), Yuen and Lee (2003), Chou et al. (2007) and Huetal.(2015);thosefindingevidenceinfavourofMMHinclude Mittal and Ross (1998), Raghunathan and Pham (1999) and Lin etal.(2006b).Onestudy,Arkesetal.(1988),foundconflicting ev-idence: theresultsofahypotheticallotterysupportedAIM,while preferencesover hypotheticalloss-insurancewere consistentwith MMH.SupportforAIMwasalsoobtainedbytwoslightlydifferent, but still hypothetical, experiments: Heilman et al. (2010), which exploitednaturallyoccurringmoodresultingfromarecentexam, andGrableandRoszkowski(2008),whoaskedsurvey-respondents to report theircurrentmood ratherthan exogenouslyinfluencing it(thusmakingcausalidentificationmorecontentious).
Evidence now also existsfrom severalexperiments employing mood-inducement and materially-incentivised risky-choice tasks. Ofthese,Nygrenetal.(1996)andYechiametal.(2016)found sup-portforMMH,whileIsenandPatrick(1983)foundsupportforthe MMH when stakes were relatively high, but for AIM when they were relatively low. Four recent papers (Schulreich et al., 2013; Campos-Vazquez and Cuilty, 2014; Stanton et al., 2014; Treffers etal.,2016)offerevidenceinfavourofAIM.Twoothers(Fehr-Duda etal.,2011;DrichoutisandNayga,2013) donotfavouronetheory overtheother.
Theeffectofshort-termhappinessonriskpreferenceshasalso been pursued by non-experimentalstudies. These haveexploited exogenousvariationsinweather,takingadvantageofitsknown ef-fect on mood. Kliger and Levy (2003) extracted risk preferences from capital market data to show investors became more risk-averse in good weather (i.e. in good mood). A similar approach
was taken by Guven and Hoxha (2015), who demonstrated that greater amounts of sunshine on the day respondents filled out DutchandGermansocialsurveysledtogreaterself-reported risk-aversion in financial and life choices. While the lattertwo stud-ies provide support for MMH, evidence in favour of AIM comes fromKamstraetal.(2003),whousedcapitalmarketdataand sea-sonalvariationindaylighthourstoshowbadmoodsledtoalower demand for risky assets, and from Otto et al. (2016) who used local weather and sports results to show good mood increased recreationalgamblinginNewYorkCity.Adifferentapproachfrom Sarno etal.(2016) alsoyieldedresults infavourof AIM;ina di-arystudy,theyfoundsubjectsweremorelikelytoengageinrisky sexual behaviour when they were in a better mood.Using face-reading software, Kahyaoglu and Ican (2016) suggested that rel-atively risky decision-making on Deal or No Deal was associated with greater happiness; this would be consistent with AIM, al-thoughdrawingcausalinferencefromthisstudyisproblematic.
Inconsistenciesdonot appeartobe overwhetherrisk is mea-suredinafinancialornon-financialcontext:supportforbothAIM andMMHhasbeenfoundinbothcases(forbothhypotheticaland realdecisions). However,another possibilityis thatdifferences in thenatureofthepositiveornegativeemotionsfelt byindividuals canleadtodifferencesintheirriskpreferences.Studieshavefound differenttypes ofbad moods can induce different behaviour; for instance, Raghunathan and Pham (1999) found inducing sadness madesubjectsmorerisk-seeking,butinducinganxietymadethem morerisk-averse. Although Ihave only considered studies which inducehappyorsademotions,theremaystillbesubtlebut impor-tantdifferencesbetweenstudiesintheprecisemoodsthesebring. Afurthercomplicationcouldbethattheeffectofhappinessonrisk preferences may not be monotonic. For example, Drichoutis and Nayga(2013)foundinducingeitherapositive oranegativemood increasedrisk-aversion,relativetoaneutral-moodcontrolgroup.
One consistent finding is that positive moods increase over-confidence – when people are in good moods, they tend to be-lieve favourable events are more likely to take place. This has been found by several experiments which manipulate moods (Johnson and Tversky, 1983; Wright and Bower, 1992; Nygren et al., 1996; Fehr-Duda et al., 2011; Schulreich et al., 2013) or correlate confidence with mood within individuals over time (Hogarthetal., 2011).Ceterisparibus, overconfidenceshouldlead to greater risk-taking, so the evidence that this does not always take place suggests positive moods induce other forces to miti-gate the overconfidence, at least in some cases. One such force, althoughprobablynottheonlyone,could belossaversion,which Isenetal.(1988)foundtobeincreasedbyinducingpositivemoods inindividuals.
Alikelyconclusionisthat,whilethesignfortheeffectof short-termhappinesson risk preferences varies, in generalthe magni-tudeisclosetozero.Theeffectsizesfound intheliterature tend tobe small,andoftensignificanceisonlyfoundinoneofa num-berofconditions.Publicationbiasmayhavekeptmorenullresults frombeing written up. The literature may be reaching the stage whereameta-analysiswouldbeausefulendeavour.
Moreover,whiletheeffectofshort-termhappinessonrisk pref-erences has been thoroughly researched, it is not clear whether it would be correct to generalise any findings to the effect of long-termhappiness. The relationship betweenlong-term happi-ness andrisk preferences has only been studied from a correla-tional perspective. Delis and Mylonidis (2015) took data from a Dutchsocialsurvey inwhichSWB andself-reportedfinancial be-haviourwereelicited;happierpeoplewerefoundtobemore risk-averseintheirownershipoffinancialassets,butmorerisk-tolerant intheir ownership of insurance. Meanwhile, research on adoles-centshasfoundthosewithhigherSWBarelesslikelytoengagein riskyviolentand/orillegal behaviour(Valois etal.,2001),andare alsolesslikely to engagein riskysexual behaviour (Valois etal., 2002).Ontheotherhand,Martinetal.(2002)foundthatchildren whoweremorecheerfulgrewuptobe morerisk-takingwith re-gardtotheir health.Overall,then,therelationship between long-termhappinessandriskpreferencesisalsounclear.
Finally,an existinggapintheliterature appearstoberesearch onthecausaleffectofriskybehaviouronhappiness.
Conclusion4. Theeffectofshort-termhappinessonriskpreferences
is unclear. Short-term happiness increases overconfidence, but this
doesnot consistently resultinan increasedappetiteforrisk.The ef-fectof long-term happiness on risk preferences is also unclear, and theeffect ofriskybehaviouron happinesshas notbeenstudied. The literatureissummarisedinTable4.
7. Therelationshipbetweenhappinessandtimepreferences
Thissectionaddressestherelationshipbetweenhappinessand timepreferences.Iconsidertimediscounting(theextenttowhich anindividual prioritisesimmediatematerialconsumptionover fu-ture material consumption) and time consistency (the extent to which one succeeds in satisfying past preferences over present timediscounting).
7.1. Studiesinvestigatingtheeffectofhappinessontimepreferences
Several studies have looked at the effect of short-term fluc-tuations in happiness on time discounting. From these, there is good evidence that positive moods result in greater patience to-wards monetary rewards. Ifcher and Zarghamee (2011), who in-ducedpositiveandneutralmoodsinsubjectsandthenaskedthem to choose betweensmaller-sooner andlarger-laterpayoffs, found thoseinthepositivemoodhadagreaterpreferencetowaitforthe larger-laterrewards.Implementingasimilarsettingbutwith hypo-theticalpayoffs,PyoneandIsen(2011)foundthesame.Theirstudy alsoprovidedaplausibleexplanation,withevidencethatthoughts about the futureloomed larger in the minds of subjects in pos-itive moods.Twoother similar experiments(McLeish andOxoby, 2007;DrichoutisandNayga,2013)yieldedinsignificantfindingson theeffectofpositivemoodontimediscounting.However,thefield studyofGuvenandHoxha(2015)alsofoundsupportforapositive effect of mood on patience; using weather as an instrumentfor mood,theyfoundhappierpeoplereportedbeingmorepatientand willing to prioritise the future over the present (this maypartly havebeenduetothefactthathappierpeopleassignedthemselves muchlongerlife-expectancies).
While positive moods appear to increase patience, it is not quite clear that negative moods reduce it. This is supported by Lerner et al. (2012), who induced sad or neutral moods in par-ticipants, and found the sad individuals to be less patient over monetary rewards. Theeffect wasdrivenby an increase in time-inconsistent present bias in the sad participants, rather than an increase in impatience generally. It is also partly supported by McLeish and Oxoby (2007); they found greater impatience amongstwomeninbadmoods,althoughnotamongstmen.Onthe otherhand,DrichoutisandNayga(2013)found subjectswho they hadinduced intonegativemoods were infact morepatient than those induced into neutralmoods. However, thisresult wasonly significantatthe10%level.Overall,thereisreasonablystrong ev-idenceofapositiveeffectofshort-termhappinessonpatience;it wouldbenaturalto expectthiseffecttobemonotonic,andthere iscertainlynotcompellingevidenceagainstitbeingso.
Totheauthor’sknowledge,thereisnospecificevidenceonthe relationshipbetweenlong-termhappinessandtimediscounting.
7.2. Studiesinvestigatingtheeffectoftimepreferencesonhappiness
Although I am not aware of any research on the effect of time discounting on any type of happiness, something can be saidabouttheeffectoftimeinconsistencyonhappiness. Theoreti-cally,thereisastrongprediction:suchadeviationfromrationality oughttoequatetoadeviationfromutilitymaximisation.17 Empir-ically, indirectevidence exists. Freyet al.(2007)andStutzer and Meier (2016) have found happiness to be negatively related to two activities associatedwithself-control problems:watching TV andovereating. Althoughthey only demonstratecorrelation,they have theoretical arguments in favour of the activities – and, by
17On the other hand, specific departures from rationality can theoretically raise
Table4
Summary of the relationship between happiness and risk-tolerance.
Correlation between happiness and risk-tolerance
Topic Result found Studies
Correlation(shortterm) Positivecorrelation GrableandRoszkowski(2008);Kahyaogluand Ican(2016)
Correlation(longterm) Positivecorrelation DelisandMylonidis(2015);Martinetal. (2002)
Negativecorrelation DelisandMylonidis(2015);Valoisetal.(2001, 2002)
Effectofhappinessonrisk-tolerance Effectofhappinesson
risk-tolerance(shortterm)
Positiveeffect(Affect InfusionModel)
Arkesetal.(1988);Campos-VazquezandCuilty (2014);Chouetal.(2007);DeldinandLevin (1986);Heilmanetal.(2010);Huetal., (2015);IsenandPatrick(1983);Kamstra etal.(2003);Ottoetal.(2016);Schulreich etal.(2013);Sarnoetal.(2016);Stanton etal.(2014);Treffersetal.(2016);Yuenand Lee(2003)
Noeffect DrichoutisandNayga(2013);Fehr-Dudaetal. (2011)
Negativeeffect(Mood Maintenance Hypothesis)
Arkesetal.(1988);GuvenandHoxha(2015); IsenandPatrick(1983);KligerandLevy (2003);Linetal.(2006b); MittalandRoss (1998);Nygrenetal.(1996);Raghunathan andPham(1999);Yechiametal.(2016)
Table5
Summary of the relationship between happiness and time preferences.
Relationship between happiness and patience
Topic Result found Studies
Effectofhappinesson patience(shortterm)
Positiveeffect GuvenandHoxha(2015);Ifcherand Zarghamee(2011);Lerneretal.(2012); McLeishandOxoby(2007);PyoneandIsen (2011)
Negativeeffect DrichoutisandNayga(2013);
Relationshipbetweenhappinessandtimeconsistency Topic Resultfound Studies Effectofhappinessontime
consistency(shortterm)
Positiveeffect Lerneretal.(2012)
extension, the time-inconsistency – causing unhappiness. Mean-while,GruberandMullainathan(2006)showedsmokingtaxes in-creasedthehappinessofsmokersrelativetothatofnon-smokers. This finding is highly consistent with smoking – and the self-controlproblemsassociatedwiththeactivity– havinga detrimen-tal impact on happiness. Direct evidence on the effect of time-consistency on happinesswould be difficult to obtain. In partic-ular,it wouldbechallengingtodesign agoodexperimentto this end, asit wouldnot be straightforwardto assign time-consistent ortime-inconsistentbehaviouramongstsubjects.
Conclusion 5. Short-term happiness appears to increase patience
over monetarygains. The effect of long-termhappiness on patience
is unknown, as is the effect of patience on happiness. There is evi-dencethatshort-termunhappinessworsenstimeinconsistency,while indirectevidencesuggeststimeinconsistencylowershappinessinthe longterm.TheliteratureissummarisedinTable5.
8. Conclusionandfutureresearchdirections
Thispaperhasreviewedtheevidence linkinghappinessto in-terpersonal economicbehaviour (selfishness,trust andreciprocity and punishment) and individual economic behaviour (risk and time preferences). A general finding is that happiness tends to result frompro-socialbehaviour. Generosity,trust and personally costly punishment– actswhichboostsociety’scohesiveness– all raise happiness. Happiness can arguably be viewed as an evolu-tionaryvehicleforallowingsuchsociallyproductivebehavioursto
flourishamongsthumans(Grinde,2005).Fromapractical perspec-tive,itisgood newsforpolicymakers, who mayfindhighlighting thehedoniceffectsofpro-socialbehaviour canhelp incentiviseit (Dunnetal.,2008).
Manyquestionsremainopeninthisliterature.Whilethe nega-tivecorrelation betweenselfishness andhappiness, andthe nega-tivecausaleffectofselfishnessonhappiness,arewell established, thedirectionofthecausal effectofhappinessonselfishness – at leastin the short term– remains uncertain.Likewise, there isa veryclearpositive relationship betweentrustandhappiness, and growingevidencethattrustcauseshappiness,butfurtherresearch isrequiredtoestablishthecausaleffectofhappinessontrust, par-ticularlyinthelongterm.
Thereisgoodevidenceofanegativeeffectofhappinesson neg-ative reciprocity, but a positive effect of negative reciprocity on happiness,intheshortterm;however,futureresearchcanresolve current uncertainty over whether these effects hold in the long term. How happiness relates to positive reciprocity (or to third-party punishment) is also currentlynot well understood, andan interestingfurtherquestion– giventheapparently positive hedo-niceffectsofpro-socialbehaviouringeneral– wouldbeto investi-gateseparatelyhowhappinessrelatestopro-socialandanti-social punishment(Herrmannetal.,2008).
