Policy Consequences of Happiness Research

Based on the economic analysis of subjective well-being, policy proposals in two areas, i.e. unemployment and status seeking behavior have been raised. We discuss the suggestion that due to the high psychic costs of individual unemployment, unemployed people should be helped more. Considerations refer to the functionality of experienced pressure in order to maintain a generous benefit system, the consequences of employment protection for employment and the missing institutional approach. The proposal of taxing status seeking in relative income and consumption is assessed based on traditional distorting effects like tax evasion and working in the shadow economy as well as based on the switching to status competition in other (potentially less productive) dimensions. An alternative perspective would compare institutions in their capacity to deal with individuals’ positional concerns.