BOOM AND GLOOM.(relation of happiness to the economy)

Publication: The New Yorker

Publication Date: 11-NOV-02

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COPYRIGHT 2002 All rights reserved. Reproduced by permission of The Condé Nast Publications Inc.

A few years ago, the Nobel Prize-winning psychologist Daniel Kahneman conducted an odd experiment. He had a group of students eat a bowl of their favorite ice cream while listening to a particular piece of music eight days in a row. After the first day, Kahneman asked them to predict how they'd feel about the whole experience once it was over. Their predictions turned out to be way off base. Some students who thought that they'd hate having to eat the same flavor eight days in a row became addicted to it. Some who thought they'd enjoy the experience were eventually repulsed by it. The upshot: people may know when they're happy, but they often don't know what will make them happy.

That poses a problem for the basic tenets of modern economics: that people act in their own self-interest most...

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