54 Questions
What is the outcome of spending more time watching TV on happiness?
Happiness decreases
Which of the following is NOT a basic human need?
Pleasure
What is the relationship between consumption and happiness beyond a certain threshold?
The sum of happiness and effort becomes negative
What distinction does Tibor Scitovsky make in his 1976 work?
Between comfort and stimulation goods
What is the primary goal of individuals in the neoclassical economic model?
Maximizing personal utility
What is the role of relational goods in the happiness equation?
Relational goods affect happiness positively
According to the homo oeconomicus model, individuals are characterized by which of the following?
Perfect rationality and self-interest
What is the name of the zone where the relationship between happiness and income breaks down?
Scitovsky's zone
What is the main finding of the Easterlin Paradox?
Beyond a certain subsistence income level, additional income does not lead to additional happiness
How is happiness typically measured in surveys?
By asking respondents to rate their happiness on a scale of 1 to 10
What is the relationship between GDP growth and happiness, according to the Easterlin Paradox?
GDP growth has no impact on happiness
What is the key assumption about preferences in the neoclassical economic model?
Preferences are complete, transitive, and monotonous
What is a common phenomenon observed in human behavior, as described in the World Happiness Report?
Immediate preference for inconvenient rewards
According to the Homo Psychologicus concept, what is a characteristic of human behavior?
Pro-social behavior in certain situations, such as the Dictator Game
What is the main issue with economics, as described in the relational perspective?
Economics poorly analyzes dimensions of relationality beyond instrumental ones
What is the consequence of placing too much weight on the present over the future, according to the World Happiness Report?
Significant consequences on retirement savings, substance abuse, and other areas
What is the term used to describe the phenomenon where economic incentives can undermine intrinsic motivations?
Crowding-out effect
What is the name of the game that demonstrates the pro-social behavior of humans, according to the Homo Psychologicus concept?
The Dictator Game
According to the Easterlin Paradox, the GDP in the US decreased from 1973 to 2003.
False
The Homo Oeconomicus model assumes that individuals are perfectly rational and have perfect self-control.
True
The primary goal of individuals in the neoclassical economic model is to pursue social preferences.
False
Happiness is typically measured in surveys using a scale of 1 to 100.
False
The Easterlin Paradox suggests that additional income always leads to additional happiness.
False
The neoclassical economic model assumes that individuals have incomplete preferences.
False
Humans always make decisions that are consistent with their long-term goals.
False
Economic incentives always increase human motivation.
False
The World Happiness Report finds that people's happiness increases indefinitely with their income.
False
Homo Psychologicus is a concept that assumes humans are purely self-interested.
False
The relational perspective in economics views markets and firms as isolated entities.
False
The Ultimatum Game is a study that demonstrates humans' selfish behavior.
False
Relational goods are not affected by the contribution of others.
False
The utility of comfort goods is normally increasing.
False
Watching TV can increase happiness due to the acquisition of relational goods.
False
The happiness equation only considers consumption and relational goods.
True
The concept of 'relatedness' is not a basic human need.
False
The happiness-income curve is always positively sloped.
False
What is the fundamental assumption about human behavior in the neoclassical economic model?
Individuals pursue the maximization of their personal utility
What is the main finding of the Easterlin Paradox, and what are its implications for the relationship between income and happiness?
Beyond a certain subsistence income level, additional income does not lead to additional happiness.
How do neoclassical economists typically measure happiness, and what are the limitations of this approach?
Happiness is typically measured through surveys asking individuals to rate their overall satisfaction with life on a scale of 1 to 10.
What are the key characteristics of Homo oeconomicus, and how do they differ from real-world human behavior?
Homo oeconomicus is characterized by perfect rationality, perfect self-control, and perfect self-interest, but real-world humans often exhibit bounded rationality, cognitive biases, and social preferences.
What is the significance of the distinction between comfort goods and relational goods in the economy of happiness?
Relational goods, such as social connections and a sense of community, are more important for happiness than comfort goods, such as material possessions.
What are the implications of the Easterlin Paradox for economic policy and our understanding of human well-being?
The paradox suggests that policymakers should focus on factors other than economic growth alone to promote human well-being, such as social connections and community development.
What does the concept of Homo Psychologicus suggest about human behavior, in contrast to the Homo Oeconomicus model?
Homo Psychologicus suggests that human behavior is characterized by a lack of self-control, as people tend to prioritize short-term rewards over long-term goals, whereas Homo Oeconomicus assumes perfect rationality and self-control.
How does the relational perspective in economics differ from traditional economic views?
The relational perspective views markets, firms, and prices as networks of relationships, whereas traditional economics focuses on individual self-interest and instrumental interactions.
What is the main finding of the Easterlin Paradox, and what are its implications for economic policy?
The Easterlin Paradox finds that beyond a certain threshold, additional income does not lead to greater happiness. This challenges the idea that economic growth is the primary driver of happiness and suggests that policymakers should focus on other factors that contribute to well-being.
What does the concept of 'crowding out' refer to in the context of economic incentives and motivation?
Crowding out refers to the phenomenon where economic incentives can undermine intrinsic motivations, leading to a decrease in overall motivation and well-being.
How does the World Happiness Report define happiness, and what are some of the key factors that contribute to it?
Happiness is defined as a multidimensional concept that includes both consumption and relational goods. Key factors that contribute to happiness include social relationships, health, and a sense of fulfillment.
What do the Dictator Game and Ultimatum Game reveal about human behavior, and how do these findings challenge traditional economic models?
These games demonstrate that humans are pro-social and willing to sacrifice personal gains for the benefit of others, contradicting the assumption of self-interested behavior in traditional economic models.
What is the main implication of the Easterlin Paradox in the context of happiness and income?
The relationship between happiness and income breaks down beyond a certain threshold.
What is the distinction made by Tibor Scitovsky in his 1976 work, in relation to the economy of happiness?
Scitovsky distinguishes between comfort goods and stimulation goods, highlighting their differing characteristics and effects on happiness.
How does the inclusion of relational goods affect the happiness equation, according to the relational perspective?
The inclusion of relational goods introduces a new factor, Rab, which depends on the contributions of others and can affect happiness.
What is the significance of the concept of 'relatedness' in the context of human needs and happiness?
Relatedness is a basic human need, which is essential for human flourishing and happiness.
How does the World Happiness Report measure happiness, and what is the significance of this measurement?
Happiness is typically measured in surveys using a self-reported scale, which provides insights into the subjective well-being of individuals and societies.
What is the implication of the 'treadmill effect' on the relationship between consumption and happiness?
The 'treadmill effect' suggests that the initial happiness gained from consumption is short-lived and requires continuous increases in consumption to maintain the same level of happiness.
Study Notes
Relational Goods and Happiness
- Homo oeconomicus: an economic model that assumes individuals pursue the maximization of their personal utility, are perfectly rational, have perfect self-control, and are perfectly self-interested.
- Economic science and utilitarianism are deeply connected, with the goal of maximizing utility.
- Homo oeconomicus has a set of preferences that are: complete, transitive, and monotonous.
Measuring Happiness
- Happiness can be measured on a scale of 1 to 10, with questions such as "Overall, how happy do you feel on a scale of 1 to 10?"
- Alternative measures of happiness include "Currently, how satisfied are you with your life as a whole?" on a scale of 1 to 10.
The Easterlin Paradox
- The Easterlin paradox states that, despite a doubling of GDP in the US from 1973 to 2003, happiness levels remained constant.
- Beyond a certain subsistence income level, additional income does not lead to additional happiness.
- The paradox suggests that there may be a limit to the happiness gains from increased income.
Relational Goods
- Relational goods refer to the positive relationships and interactions between individuals.
- Examples of relational goods include time spent with friends and family, volunteering, and community engagement.
- Relational goods can contribute to happiness and well-being, but may be crowded out by extrinsic activities such as watching TV.
Alternative Models of Human Behavior
- Homo psychologicus: a model that recognizes that humans are not perfectly rational, and may have cognitive limitations and biases.
- Homo psychologicus may exhibit procrastination, placing too much weight on the present over the future, and may have inconsistent preferences.
- Homo socialis: a model that recognizes that humans are social beings, and may have a preference for social interactions and relationships.
The Importance of Relationality
- Economics can be understood as the study of interactions among individuals, and markets, firms, and prices can be seen as networks of relationships.
- The key issue is not whether economics recognizes relationality, but rather why economics is poor in analyzing dimensions of relationality beyond the instrumental ones.
- Relational goods and relationships can have a significant impact on happiness and well-being, and should be considered in economic models.
This quiz explores the fundamental assumptions of human behavior in economics, including the concept of homo oeconomicus and the pursuit of personal utility. Learn about the neoclassical approach and its connection to utilitarianism. Test your understanding of individual preferences and consumption of goods and services.
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