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Evolutionary Efficiency and Happiness

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  • Luis Rayo
  • Gary S. Becker

Abstract

We model happiness as a measurement tool used to rank alternative actions. Evolution favors a happiness function that measures the individual’s success in relative terms. The optimal function is based on a time-varying reference point—or performance benchmark—that is updated over time in a statistically optimal way in order to match the individual’s potential. Habits and peer comparisons arise as special cases of such an updating process. This updating also results in a volatile level of happiness that continuously reverts to its long-term mean. Throughout, we draw a parallel with a problem of optimal incentives, which allows us to apply statistical insights from agency theory to the study of happiness.

Suggested Citation

  • Luis Rayo & Gary S. Becker, 2007. "Evolutionary Efficiency and Happiness," Journal of Political Economy, University of Chicago Press, vol. 115(2), pages 302-337.
    • Handle: RePEc:ucp:jpolec:v:115:y:2007:p:302-337
    DOI: 10.1086/516737
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    References listed on IDEAS

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