Happiness has become an important concept in economics as a target for government policy at the national level. This is mirrored in an increasing understanding of the microeconomic effects of increased happiness. While correlational studies have for many years documented a relationship between individual-level happiness and productivity, more recent work provides causal evidence that a positive shock to happiness can boost productivity significantly. These studies include three strands of research. The first provides a number of longitudinal surveys that have generated evidence linking happiness to productivity but run the risk of confounding happiness with other related variables that may be driving the relationship. The second includes laboratory experiments that simulate a workplace under tightly controlled conditions, and this strand has established a clear relationship between positive happiness shocks and rises in productivity. The third involves examining experimental field data, which sacrifices the control of laboratory experiments but offers greater realism. However, there is still work to be done generalizing these findings to more complex work environments, especially those that involve cooperative and team-based tasks where increases in happiness may have other consequences.
