Aspiration and Tranquility: Two Types of Happiness

Abstract This paper advances two distinctions concerning satisfaction. First, happiness differs from well-being. Happiness is the by-product satisfaction experienced by the decision maker (DM) when reflecting on her well-being through contextual comparison. Second, there are two forms of contextual comparison and, consequently, two types of happiness. The distinction follows the temporal orientation of the context: the DM may evaluate current well-being either retrospectively (backward-looking), by reference to past well-being, or prospectively (forward-looking), by reference to aspired well-being. Retrospective (backward-looking) comparison gives rise to what this paper calls “happiness-as-tranquility” (or its absence), whereas prospective (forward-looking) comparison gives rise to “happiness-as-aspiration” (or its absence). One implication of these distinctions is a resolution of the income–happiness paradox, also known as the “Easterlin paradox.”