Education and happiness: Some theory
Human capital theory views education as an initial investment that generates a stream of later
returns in the form of increased productivity, leading to better employment prospects and higher
earnings (Becker 1962). However, increased education may offer benefits in a wide range of other
spheres, such as health and marriage prospects (Hartog & Oosterbeek 1998, p.245; Haveman &
Wolfe 1984). These considerations point to persons with higher education having better life
outcomes and, one would assume, greater subjective wellbeing.
The role of rivalry and aspirations in the happiness literature’s attempts to account for the
seemingly weak relationship between income and happiness and for the ‘Easterlin Paradox’ can be
applied equally to education. Education is known to improve incomes and outcomes in nonfinancial
life domains. Individuals therefore are likely to expect better outcomes if they have
achieved more education, and to a large extent they will have participated in education for the
specific purpose of achieving these improved outcomes. If this raises their aspirations, and people’s
happiness is determined by their circumstances relative to their aspirations, then the contribution of
education to happiness will be weakened. If aspirations are heightened disproportionately more
than outcomes, then education may even be associated with lower happiness.
If rivalry effects dominate—if it is people’s circumstances relative to others that determine their
happiness rather than their absolute circumstances—then again the link between education and
happiness may be ambiguous. It follows that as education levels generally have increased over time
we should not expect any general increase in happiness, but that more-educated people should still
on average be happier than less-educated people. However, level of education may change the
reference group of people against which they assess their ‘relative’ standing. If people who graduate