Economics Articles

Essays on topical issues, latest developments in UK and global economies, and answers to readers questions

Happiness economics

Posted on April 28, 2017

The economics of happiness seeks to relate economic decisions to a wider measure of welfare than traditional measures of income and wealth. Happiness economics attempts to evaluate a wider range of factors affecting well-being, quality of life and self-reported levels happiness. There are now several measures of happiness, such as Gross Domestic Happiness. (GDH) Countries …


Principal-Agent Problem

Posted on April 25, 2017

The principal-agent problem occurs when a principal delegates an action to another individual (agent), but the principal does not have full information about how the agent will behave. Secondly, the interests of the principal diverge from that of the agent, meaning that the outcome is less desirable than the principal expects.   Shareholder and manager …


Measuring utility

Posted on April 22, 2017

Utility is a concept given to how much satisfaction/happiness a person gains from a particular action. Utility derived from the philosophy of utilitarianism. An early advocate of Utilitarianism was Jeremy Bentham who argued that utility was the accumulation of pleasure and avoidance of pain. The concept was refined by others such as J.S. Mill who …