Happiness and Economic Performance

Oswald, Andrew J.

doi:10.1111/j.1468-0297.1997.tb00085.x

Cited by 1,097 publications

(733 citation statements)

References 55 publications

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“…Similarly, the mean happiness in Japan remained constant from 1958 to 1986 despite a five-fold increase in real per capita income over the twentyeight-year period. Equivalent results obtained in other countries; large increases in national wealth were accompanied by little or no change in measures of national well-being (Diener & Biswas-Diener, 2002;Easterbrook, 2003;Oswald, 1997). Within-nation comparisons over time are consistent with both cross-national data and within-nation differences among individuals; once a certain threshold is reached, greater wealth buys very little additional happiness.…”

supporting

confidence: 61%

Shareholder Wealth Maximization and Social Welfare: A Utilitarian Critique

2013

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Many scholars and managers endorse the idea that the primary purpose of the firm is to make money for its owners. This shareholder wealth maximization objective is justified on the grounds that it maximizes social welfare. In this article, the first of a two-part set, we argue that, although this shareholder primacy model may have been appropriate in an earlier era, it no longer is, given our current state of economic and social affairs. To make our case, we employ a utilitarian moral standard and examine the apparent logical sequence behind the link between shareholder wealth maximization and social welfare. Upon close empirical and conceptual scrutiny, we find that utilitarian criteria do not support the shareholder model; that is, shareholder wealth maximization is only weakly linked to social welfare maximization. In view of the dubious validity of this sequential argument, we outline some of the features of a superior corporate objective-a variant of normative stakeholder theory. In the second article, we will advance and defend our preferred alternative and then discuss some institutional arrangements under which it could be implemented.KEY WORDS: shareholder wealth maximization (SWM), corporate objective function, normative corporate governance, utilitarianism, social welfare "If you will pardon me for being personal, it makes a great difference in my attitude toward my job as an executive officer of the General Electric Company whether I am a trustee of the institution or an attorney for the investor. If I am a trustee, who are the beneficiaries of the trust? To whom do I owe my obligations?"-Owen D. Young, former Chairman of GE (Dodd, 1932(Dodd, : 1154 T HE ISSUE ARTICULATED BY MR. YOUNG decades ago is still relevant today and is one that a considerable number of scholars have devoted themselves to, not in terms of particular companies, but for corporations in general. This article addresses the underlying question, one that lies at the very core of corporate governance for both practicing managers and business scholars: what should be the objective of corporations in a market capitalist economy? Put somewhat differently, what should managers, who govern these firms, strive to achieve?https://www.cambridge.org/core/terms. https://doi.org/10.5840/beq201323215Downloaded from https://www.cambridge.org/core. IP address: 52.183.12.225, on 28 Apr 2019 at 03:44:10, subject to the Cambridge Core terms of use, available at Business Ethics QuarterlyWe aim to answer these questions in two separate articles. This first article will demonstrate the weaknesses of the conventional corporate objective-shareholder wealth maximization (SWM)-from a utilitarian perspective. It will focus on the apparent logic behind SWM as part of a set of institutions intended to produce maximal social welfare, the ultimate goal of utilitarian moral thought. After finding each of the four interconnected arguments that make up that logic quite weak, we suggest a path toward a credible alternative corporate objective. The second ...

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confidence: 61%

Shareholder Wealth Maximization and Social Welfare: A Utilitarian Critique

2013

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“…I think there is evidence of less than complete adaptation in regard to other life circumstances as well, such as friendship, loss of a job, and retirement (29,(37)(38)(39)(40)(41).…”

Section: Aspirations and Adaptationmentioning

confidence: 99%

Explaining happiness

Easterlin

2003

Proc. Natl. Acad. Sci. U.S.A.

818

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What do social survey data tell us about the determinants of happiness? First, that the psychologists' setpoint model is questionable. Life events in the nonpecuniary domain, such as marriage, divorce, and serious disability, have a lasting effect on happiness, and do not simply deflect the average person temporarily above or below a setpoint given by genetics and personality. Second, mainstream economists' inference that in the pecuniary domain ''more is better,'' based on revealed preference theory, is problematic. An increase in income, and thus in the goods at one's disposal, does not bring with it a lasting increase in happiness because of the negative effect on utility of hedonic adaptation and social comparison. A better theory of happiness builds on the evidence that adaptation and social comparison affect utility less in the nonpecuniary than pecuniary domains. Because individuals fail to anticipate the extent to which adaptation and social comparison undermine expected utility in the pecuniary domain, they allocate an excessive amount of time to pecuniary goals, and shortchange nonpecuniary ends such as family life and health, reducing their happiness. There is need to devise policies that will yield better-informed individual preferences, and thereby increase individual and societal well-being.living level ͉ health ͉ marital status ͉ aspirations

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“…One approach is to listen to what human beings say. Research across the fields of psychology, decision science, medical science, economics, and other social sciences draws upon questionnaire data on people's subjective well-being (1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13). These are numerical scores (e.g.…”

mentioning

confidence: 99%

“…from very satisfied…very dissatisfied) in response to survey questions such as: how happy are you with your life? Sample sizes in these statistical analyses typically vary from a few dozen individuals in a laboratory to many tens of thousands of people in a household survey [reviewed, for example, in (2,4)]. …”

mentioning

confidence: 99%

Objective Confirmation of Subjective Measures of Human Well-Being: Evidence from the U.S.A.

Oswald

2010

Science

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571

380

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A huge research literature, across the behavioral and social sciences, uses information on individuals' subjective well-being. These are responses to questions-asked by survey interviewers or medical personnel-such as "how happy do you feel on a scale from 1 to 4?" Yet there is little scientific evidence that such data are meaningful. This study examines a 2005-2008 Behavioral Risk Factor Surveillance System random sample of 1.3 million United States citizens. Life-satisfaction in each U.S. state is measured. Across America, people's answers trace out the same pattern of quality of life as previously estimated, using solely nonsubjective data, in a literature from economics (so-called 'compensating differentials" neoclassical theory due originally to Adam Smith). There is a state-by-state match (r = 0.6, P < 0.001) between subjective and objective well-being. This result has some potential to help to unify disciplines.

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Happiness and Economic Performance

Cited by 1,097 publications

References 55 publications

Shareholder Wealth Maximization and Social Welfare: A Utilitarian Critique

Shareholder Wealth Maximization and Social Welfare: A Utilitarian Critique

Explaining happiness

Objective Confirmation of Subjective Measures of Human Well-Being: Evidence from the U.S.A.

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