Ben's Take on Happiness

Ben Bernanke gave the commencement address at the University of South Carolina this year and I think he did a great job of summarizing the "economics of happiness". I recommend you give it a read, even though it's a bit long, as most commencement addresses are. For the ADD among you, here are a list of the keys to happiness nd couple of snippets:

Ben's Keys:
1) Spend time with family and friends.
2) Spend time in activities that give you "flow".
3) Challenge yourself.

More generally, economic policymakers should pay attention to family and community cohesion. All else equal, good economic policies should encourage and support stable families and promote civic engagement. And to help people feel in control of their own destinies, policies should respect the autonomy of individuals, families, and communities to make their own decisions whenever possible, as research has confirmed the intuitive notion that individual freedoms contribute to life satisfaction.

Happiness is just one component of the broader, longer-term concept of life satisfaction, and only one indicator of how the fabric of our lives is being shaped by our choices and circumstances. I am reminded of a story about Abraham Lincoln. According to the story, Lincoln was riding with a friend in a carriage on a rainy evening. As they rode, Lincoln told the friend that he believed in what economists would call the utility-maximizing theory of behavior, that people always act so as to maximize their own happiness, and for no other reason. Just then, the carriage crossed a bridge, and Lincoln saw a pig stuck in the muddy riverbank. Telling the carriage driver to stop, Lincoln struggled through the rain and mud, picked up the pig, and carried it to safety. When the muddy Lincoln returned to the carriage, his friend naturally pointed out that he had just disproved his own hypothesis by putting himself to great trouble and discomfort to save a pig. "Not at all," said Lincoln. "What I did is perfectly consistent with my theory. If I hadn't saved that pig, I would have felt terrible."