1 Following the growing literature, I define “happiness” as a short-term state of awareness that depends on a person’s perceptions of one’s immediate reality, as well as on immediate external circumstances and outcomes. By “life satisfaction” I mean a longer-term state of contentment and well-being that results from a person’s experiences over time.
Surveys and experimental studies have made progress in identifying the determinants of happiness and life satisfaction. Interestingly, income and wealth do contribute to self-reported happiness, but the relationship is more complex and context-dependent than standard utility theory would suggest.