Mainstream economists have recently discovered what heterodox economists have long known - that the study of psychology is useful in understanding human behavior and the success of socioeconomic policy. Many orthodox economists now accept that happiness exists, can be objectively measured, has important individual and social consequences and can be externally altered (Easterlin 1974; Kahneman 1999; Blanchflower and Oswald 2004; Layard 2005). The new research on well-being suggests that economics must now go beyond the nineteenth century psychological approach that characterizes neoclassical analysis, toward a more "Veblenian" or Humanistic approach to human psychology (Cordes 2005). The utilitarian (Benthamite) psychology that has dominated mainstream economic thought for the last century tries to explain and predict human behavior as the outcome of self interested action, which is manifest, ideally, in voluntary exchange. Yet, among other failures, this hedonistic psychology is largely incapable of explaining why economic growth has not improved well-being in the developed world; it sheds little light on the abundance paradox experienced in many rich countries today. The inability of economic growth to improve life satisfaction in the developed world is becoming increasing apparent. Given the social, psychological and environmental fallout of the last 50 years of economic growth, it is unclear whether "material abundance" in advanced nations is a reflection of social progress. Such questioning echoes the doubts of early socialist thinkers (such as Owen, Mill, Marx, and Keynes) that access to more goods will improve the human condition. Revealing the seamy side of growth, recent well-being research seriously questions whether the preponderant emphasis placed on production over the last 50 years has allowed individuals to "live wisely and agreeably well" (Keynes 1972).
Global Social Economy: Development, Work and Policy p. 115-135