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Happiness Studies

May Change State Policies

Money is a possible factor in determining what makes people happy

By: Clarissa Gonzales

10 December 2018

Hawaii is as close to “paradise” as it gets compared to the rest of the United States, according to a recent study. But why are people here – despite the state's societal troubles – so relatively happy?


For the past 10 years, Hawaii has ranked as one of the top 10 happiest states in the Gallup-Sharecare Wellbeing Index, an annual study which surveys residents in all 50 states. Those who live in Hawaii know the darker parts of this reality, such as high rates of homelessness, a high cost of living, and drug abuse plaguing residents throughout the state. Yet, at least the visitors here see their time as a chance to relax and leave the problems of everyday life behind.


While Hawaii may not be perfect, this study suggests, it might be as close as we can get.


Happiness is an intangible, immeasurable concept to many people. But in recent years, happiness has become a popular subject of economic study.


Standard economics examines how people choose to use their resources to maximize what they get in return. Researchers have now found that the well-being of a country’s citizens is more closely linked to how happy its citizens are than to their average income. As a result, happiness economics has emerged as a study of how to best maximize a person's happiness and well-being.

Economics professor Inessa Love teaches Economics of Happiness at the University of Hawaii at Manoa. She says that there are a few reasons why Hawaii visitors and residents might be more likely to be happy compared to residents in other states.  

“It has the preconditions for what we know is associated with happiness: being active, being in nature, good weather, a family-centered life,” Love said. “We know from research those are some of the most important things that determine happiness.”

Researchers have developed methods to quantify happiness levels, allowing them to compare demographics and study factors that impact happiness.


In the Gallup-Sharecare study, Hawaii dropped from first place in 2016 to third place in 2017. But, Hawaii is still one of only two states –the other being Colorado – to rank within the Top 10 every year since the study began.


Love uses the Gallup-Sharecare data on Hawaii residents for the past 10 years to retest existing hypotheses about the effects different factors – such as race, gender, education, household composition, and age – have on happiness using data specific to Hawaii.


From what she’s seen so far, Love says the data from Hawaii’s demographic generally follows national trends and previous research results.


But there’s one slight difference that could have a big impact on Hawaii residents.


“In class, we say income matters, but not as much,” Love said. “Here in Hawaii, it seems it matters quite a bit.”


In her Economics of Happiness course, Love shares research with her class that shows the effect income has on happiness is much smaller than the large impact that other factors can have. Her preliminary results show that this might not be the case in Hawaii.


“I was a little surprised by the magnitude of the income effect,” Love said. “The income effect was larger than the effects of marriage, education, race, gender, age, larger than any other one I’ve looked at so far.”

The Hawaii Leadership Forum provided the data Love is using for her project. Next year, she will have a team of researchers running more detailed analyses. Love says the results can help inform future state policies in Hawaii.

“I think it’s part of the bigger piece of the puzzle about improving life in Hawaii,” she said.

Love says her research could help both lawmakers and non-governmental agencies prioritize their efforts for more targeted, efficient approaches to improving residents’ wellbeing.


“If the research found that race or education were the largest determinants of well-being, then policymakers could put more effort into equalizing opportunities by race or education,” explained Love.


However, if research continues to point toward annual income as having the largest effect on residents’ happiness, organizations may eventually use these findings to support income-oriented policies, like minimum wage. Her results are still preliminary and more work is needed to make specific policy recommendations.


“Once we understand what improves wellbeing, then we know what to target,” Love said. “I think it’s important to understand, where can you get the biggest bang for your buck?”

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