In her contribution to this volume, Martha Nussbaum remarks that Jeremy Bentham ‘had a way of making life simpler than it is’. The same could be, and often has been, said of mainstream economics, which over the last century has largely eschewed consideration of happiness and other factors not easily plugged into the equations – most of the stuff of life, in short, and a great deal of what we care about in matters economic. Or so it has, at least, until recently; this admirable collection of papers by an outstanding array of economists and other researchers indicates how far the field has come in recent years. Economists are, again, taking happiness seriously.

The book collects 13 papers along with an editor's introduction, and stems from a 2003 conference called ‘The Paradoxes of Happiness in Economics’, held at the University of Bicocca. Accordingly, the papers centre on themes relating to contributor Richard Easterlin's famed paradox of happiness – the ‘Easterlin Paradox’ – first described in his 1974 paper, ‘Does Economic Growth Improve the Human Lot? Some Empirical Evidence’. In their helpful introduction to the volume, editors Bruni and Porta discuss a variety of ‘paradoxes of happiness’; while it is not entirely clear just what counts as a paradox of happiness, the rough schema seems to be this: money has surprisingly little impact on happiness. More narrowly, the Easterlin Paradox refers to the curious juxtaposition of three findings: while wealthier individuals in a given country tend to be happier than poorer ones, it is not clear that richer nations are generally happier than poorer ones; and worse, there seems to be no relation between a nation's economic growth and the average level of happiness therein.

All this, if true, is not good news for the economic orthodoxy, which has tended to suppose (a) that what matters is people getting whatever they happen to want, and (b) that money, being a kind of freedom to get whatever you happen to want, should therefore be an extraordinarily powerful means for improving the human lot – the more the better. Since happiness ranks pretty high on the list of things people want – for many, it is the list – the orthodox view requires us to regard economic growth as a potent happy-making enterprise. Bad news, then, if the paradoxes are real.

Are they? Most likely yes, in one form or another, despite prominent doubts voiced recently. (Indeed, the paradoxes might even be more pronounced than Easterlin et al. have argued, since current measures may exaggerate the connection between happiness and income; e.g. positivity biases may be more pronounced among the affluent.) While most of the contributors appear to grant their existence, there is dissent, notably in the chapter by pioneering sociologist Ruut Veenhoven, who has challenged the Easterlin findings in earlier work. Veenhoven's doubts may seem congenial to the orthodox view, but even his data yield a pretty weak relationship between growth and happiness. This is perhaps to be expected given his view, defended here, that ‘happiness needs no paradise’. In short, human needs are modest, requiring little to make us happy, so that even people facing apparent hardship, like the handicapped and the poor, turn out to be surprisingly happy. By and large, life is good, and any appearance of a paradox rests on an inflated view of human needs. Veenhoven's claim that human beings are not as needy as many would have it is quite plausible, though I suspect the measures tend to overstate how happy people are. But in its substance Veenhoven's chapter appears to affirm the challenge happiness poses to mainstream economics. Veenhoven and Easterlin et al. seem fundamentally to agree that, paradox or no, economic growth contributes far less to human happiness than many economists have supposed.

Since it is not possible for a brief review to do justice to all the essays in this book, I will focus on several chapters where central issues of interest to both economists and philosophers come to the fore. Easterlin's chapter, ‘Building a Better Theory of Well-Being’, aims to rebut popular views about the sources of well-being in psychology and economics, drawing on a life satisfaction conception of well-being and happiness on which well-being depends on the gap between an individual's aspirations and achievements. In the case of economics his target is the ‘more is better’ view: contrary to standard doctrine, more income tends not (above a certain point) to significantly improve well-being, mainly because of adaptation: people become habituated to their level of affluence, ending up little or no happier after a gain in income than they were before. People's aspirations for various material goods thus evolve in lockstep with their achievements, as Easterlin illustrates with some striking data on desires for ‘big-ticket’ goods: get 10% more stuff, and instead of being lastingly happier for it, you'll simply want 10% more stuff than you did before. (Another reason for the uneven impact of money on happiness, according to Easterlin and several other contributors, is social comparison. Hence in part the importance of relative versus absolute income in reported happiness.)

In psychology, Easterlin tells us, the tendency has been to posit near-complete adaptation, not just in certain domains like money, but across the board. Here the idea is that people have more or less fixed set points, levels of happiness to which they tend to return, virtually come what may. Happiness is basically a matter of temperament, so there is little point in pursuing it or promoting it. As Easterlin pointedly observes, the set point theory yields a ‘nihilistic view of economic and social policy’, a depressing consequence oddly underappreciated in the literature. Against set point theory, Easterlin argues that adaptation differs across life domains, being less complete in some areas, for instance health and family life, than others, notably income. So lasting improvements in well-being are possible; we just need to focus our energies on things like time with family, which can yield those benefits, rather than money, which generally cannot. Setting aside quibbles about his view of well-being, Easterlin's basic position here seems eminently plausible, though I wonder how many psychologists would still endorse the strong form of the set point model that he targets, which has been losing favour recently. Where set point talk persists – and it does remain common – researchers increasingly qualify it in various ways, arguing for instance that circumstances can change our set points. (At a certain point, however, one wonders whether such modifiers end up letting the air out of the idea: does anything very interesting remain once we begin speaking of a person's living-in-American-suburbia-while-unemployed-but-not-destitute-and-widowed-yet-still-enjoying-good-friendships happiness set point?)

While Easterlin does not claim money to be irrelevant for well-being, it bears remarking that our measures of well-being are coarse-grained, and indeed it is plausible that happiness itself only offers, at best, a coarse-grained proxy for well-being. Things might benefit us by making our lives more pleasant, even if they do not change how happy we are, or how well, fundamentally, we are doing. It is doubtful that living in a house with a fabulous view will make you lastingly happier, but it may very well make your life a little more pleasant over the years, if only through occasional moments of enjoyment you would have lacked otherwise. I suspect that many of the things money can buy are like that. So even granting that income has no impact on happiness or the fundamental character of a person's well-being, it might still bring some benefit. This is not a large point of difference, but it is important to note, since many find it incredible that greater income offers no lasting benefits once we get out of poverty. I doubt I would be happier given a doubling in my salary, or that it would make much difference in how well my life goes for me, but I sure wouldn't object. There would still, clearly, be some benefit in having more money to travel and so forth.

At least, assuming that I spent the money well – a point Robert Frank emphasizes in his contribution, where he challenges the notion that only relative income matters, while in absolute terms it doesn't matter how much money you have. Absolute income can matter for well-being, he contends, but it depends on how we use it. Like Easterlin, Frank maintains that adaptation differs across domains, and illustrates the point with a series of hypothetical choices between societies in which people can either have larger houses on the one hand, or shorter commutes, more time with friends, more holidays, or greater workplace autonomy, on the other. Though people regularly choose things like larger houses over the latter sorts of goods – particularly where others are doing likewise – there is good reason to think that those other goods are much more apt to benefit us over the long haul: we get used to big houses, but not long commutes. Why do people do this? In part because the adaptation-prone domain of conspicuous consumption is more susceptible to positional ‘arms races’, where my achievements worsen your situation unless you follow suit, than the more fulfilling goods of inconspicuous consumption. Greater wealth can promote both kinds of consumption, Frank suggests, but in practice it may often undermine inconspicuous consumption. Collective action is needed to dampen positional competition so that people can more easily focus on inconspicuous goods whose benefits are not so thoroughly dissipated by adaptation. Frank is surely right that the connection between income and happiness depends a lot on how we use the money. But we should not overestimate the support Frank's position offers for growth-oriented policy. While growth can foster beneficial forms of inconspicuous consumption, for instance making it easier to afford long holidays, policies aimed at promoting such consumption will often be alternatives to growth – since, for example, a shorter workweek will tend to mean less income. As well, even the wisest spending habits can only do so much if what it takes to get that wealth is corrosive to well-being. The clearest worry of this sort concerns human sociability: social connectedness is not just one among many sources of well-being. It is arguably the cornerstone of human well-being, the thing we need more than anything else beyond the bare necessities of survival. Yet the pursuit of affluence tends very often to weaken social bonds, not least by fostering high levels of fluidity and mobility.

In fact the importance of social relations for happiness, and the problematic relationship between social connections and economic growth, particularly as pursued in recent decades, may be the most prominent theme throughout the essays in this volume. Easterlin, Frank, Veenhoven, and Richard Layard all remark on the problem, and the papers by Robert Sugden, Stefano Zamagni, and Charlotte Phelps all centre on the ways in which traditional economic thought has taken too little account of human sociality, assuming an overly individualistic view of human life. (Phelps’ paper is a bit unusual in taking a psychoanalytic approach. While I am not sure how convincing the argument is, the chapter brings a refreshing change of perspective.) Related themes appear in the chapter by Matt Matravers, which discusses the role of happiness in political philosophy and notes a tension between the demands of happiness, which depends on the people close to us, and morality, which requires concern far beyond that narrow circle. In their contribution Oded Stark and You Qiang Wang develop a formal argument for the plausible notion that a concern for relative position can drive people to self-segregate, congregating with those of similar status and thus reducing the toll of inequality. It might be added that people can do so without physically migrating, simply by choosing whom to compare themselves to.

Layard's chapter, which shows how policies might be devised to compensate for problems of adaptation and position-sensitivity, nicely illustrates how traditional economic tools and happiness research can be brought together. A chapter by two other luminaries in this area, Bruno Frey and Alois Stutzer, similarly showcases some ways in which happiness research can help to answer economic questions. Yet another pioneer, Bernard van Praag, explores the relative merits of two measures of financial satisfaction, which exhibit some of the properties of broader life satisfaction measures. In the final chapter, Luigi Pasinetti suggests a return to the classical approach to economics, where the problems of advancing material wealth, rather than utility maximization, took centre stage. This project, he argues, does not require the sorts of strong assumptions about human psychology that this volume reveals to be so problematical. At the same time, he wants to broaden the purview of economic inquiry to include, among other things, questions of the social goals we ought to be pursuing, and not simply the means to achieving whatever ends people happen to have.

This point speaks to the ethical doctrines economists rely on, tacitly or otherwise, and this question is taken up in Nussbaum's chapter. There she helpfully contrasts the views about well-being of Bentham, Mill, and Aristotle. The first and last of these represent sharply opposed popular views of the matter, often dubbed by empirical researchers the ‘hedonic’ versus ‘eudaimonic’ approaches to well-being. Mill, in between, tries sensibly (if unsuccessfully) to incorporate insights from both approaches. As Nussbaum notes, Bentham's narrow form of hedonism, explicitly endorsed in this volume by Layard and sympathetically regarded by many others in this literature, would not have impressed many thinkers in the tradition leading up to modernity. (Nor, we might add, would the idea that well-being consists in getting whatever you happen to want, another simple doctrine that most ancients held in utter contempt. For that matter, contemporary philosophers are not terribly fond of these views either.) Yet many readers of this book, particularly outside philosophy, are liable to worry that Nussbaum's Aristotelian leanings go too far in the other direction, imposing an overly intrusive and moralistic vision of personal welfare on individuals. Who are we to say that so-and-so is doing poorly, when by her own standards she's doing just fine?

Important questions are indeed at stake here, but the practical upshot of this sort of debate can be less than it appears. On the one hand, subjective well-being research, and policy making use of it, requires no meaningful commitment to any conception of well-being: virtually no serious figure in the history of philosophy, Aristotle included, would deny that it matters whether people's lives are miserable or fulfilling, or whether people see their lives as failures. (While Nussbaum notes that ‘happiness’ can be used in an evaluative manner that renders dubious common claims that the science tells us whether people are happy, most researchers use ‘happiness’ less ambitiously, as merely a descriptive psychological term like ‘depression’. So their assertions about how ‘happy’ people are typically assume no substantive theses about value.)

On the other hand, even rabid subjectivists about well-being need not, and should not, insist that only straightforwardly subjective indicators of well-being, like affect and life satisfaction measures, must be employed. One way or another, people care about lots of things, and there's nothing wrong with measuring, and considering in policy, whatever people happen to care about (within broad limits, at least, pace religious values etc.). Even if only pleasure ultimately mattered, say, our measures of that value will never be fully accurate, and we will at any rate want to track the major causes of pleasure, such as health. So hedonists should be happy to measure values other than pleasure, as indirect indicators of well-being. And while Aristotelians characteristically value developing and exercising one's capacities, so do most people – hedonists included – particularly once they think things through. When views like this command broad assent, at least among people who bother to think about it, it may not be unreasonable to at least pay attention to those values when setting policy. You can do that without forcing citizens off the couch at gunpoint.

In short, Benthamites, Aristotelians, and those in between could agree on the need for a plurality of well-being indicators, and could find much common ground regarding what those indicators would be. Whether we agree with Nussbaum that Bentham's value theory makes life simpler than it really is, we can accept the practical upshot of her critique, which is that our deliberations about how to live together should be mindful of the manifold complexities of life. And this means resisting simple formulae, like ‘maximize gross happiness’, when thinking about what to do. Sensible deliberation will never get much help from a single rule or number, or even a few.

We must as well resist the urge, so powerful in the academy, to limit our gaze to just the variables to which our analytical tools are suited, in the process ignoring the many values that prove inconvenient to our instruments. Otherwise ‘happiness’ and ‘well-being’ become just what our instruments can easily measure, leaving us (yet again) with a ‘drunks-under-the-streetlight’-style inquiry, focusing only where the light is best, and never mind that the keys couldn't possibly be there. To some extent this is inevitable, but it will be important, not only to improve our measures, but to maintain a healthy appreciation for the values our measures might be missing.

The book, while gladly recommended, is not without flaws: the writing is uneven and often difficult, compounding the technical nature of some of the discussion, which philosophers and others ill-versed in economics may find hard going at times. As well, the text could benefit from a closer proofreading, for instance in the otherwise very helpful introduction where one passage bafflingly appears three times. But the quality of discussion is largely high, making this a fine survey of the issues in this area. The diversity of perspectives, and the extensive reflections on the broader aims and nature of economics, make this book an excellent resource for those seeking a broad grasp of the relation between happiness research and economics. Perhaps we philosophers will soon follow the economists’ lead, before long making such a volume possible in our own field.