This may seem like an odd question. Many people would say that it must be true by definition that when we make good decisions we are happier. It seems to me, however, that this view is too simplistic.
In order to bring the discussion down to earth consider the case of a person who decides to devote more of her time to earning income and less to leisure. If you ask an economist whether she has made a good decision there is a fairly high probability that his response would be that along the lines of that suggested by Irving Fisher (1892) namely that individuals reveal their utility through their actions. He might say: “It is reasonable to presume that the combination of work and leisure that she has chosen makes her happier than the available alternatives”.
An alternative approach, favoured by psychologists and an increasing number of economists, would be to actually ask the person how happy (or how satisfied with life) she was both before and after she had made the decision to increase her hours of work. If her responses implied she was less happy – after the researcher had made allowances for other changes in her life in the intervening period – this approach would suggest that she had made a bad decision. In this instance this approach seems to suggest that the economist’s presumption of rational choice is wrong.
However, before rushing to judgement, consider a slightly different situation. In this case, rather than deciding to take on more paid work, the person concerned decides to have a child. Our conventional economist’s response would be the same – her decision to have a child implies that she is happier with this option than with the alternatives available. Our psychologist’s survey is likely to show that she is less happy (or less satisfied with life) than she was before giving birth. (There is evidence from many surveys that people who have children living at home are usually less happy than those in similar circumstances who do not have children.)
So, does this mean that our decision-maker made a bad decision by deciding to have the child? It could mean that, but I think that interpretation would usually make no sense at all. When women choose to have children they rarely regret their choices even though the sacrifices they make in looking after their “little bundles of joy” are sufficient to cause them to report lower happiness. By commonly accepted standards these are usually good decisions – they are sensible and rational.
Other examples can be cited of sensible and rational decisions that do not add to happiness, or only add to happiness for a short time. In the case of marriage, there is typically an increase in happiness for only a year or two before and after the event and then happiness returns to its previous level. Apparently cohabitation usually results in a smaller temporary increase in happiness than does marriage. Since separation and divorce have negative effects on happiness the whole idea of entering into relationships would seem problematic if viewed purely in terms of the happiness that people can reasonably expect based on the experiences of others.
My point is that there is more to life than self-reported happiness or life satisfaction. In his little book, “Happiness” (2005), Daniel Nettle identifies three levels of happiness: momentary feelings; judgements about feelings; and quality of life (flourishing or fulfilling one’s potential). Surveys of happiness and life satisfaction reflect the first two elements, but they usually fail to take account of the third element.
We seem to have been bombarded over the last year or so by arguments that the decisions people make cannot necessarily be presumed to make them happy. See here, here, and here for my discussion of books pushing such arguments. I think it is about time there was more recognition that good decisions do not always make people happy.
This point can be illustrated by returning to my first example of the person who was less happy after deciding to increase her hours of work. Isn’t it possible that this decision might have been a good one? How do we know that the person concerned had not decided to make some sacrifices in the short term in order to promote some longer term goal such as being able to afford to have children or to being able to give her children a better education? Happiness and life satisfaction indicators do not tell us the extent to which people are fulfilling the goals that are important to them.