Happiness and Job Satisfaction

Published: 2019-12-04 09:00:00
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An Investigation on The Role of Employees Happiness and Job Satisfaction on Improving Workplace Outcomes on the GCC

Literature Review

Employee happiness and job satisfaction are two significant factors that immensely contribute to the success of any given organization. By using a thematic approach to cover the subject issue, this analysis covers factors associated with happiness and job satisfaction, measurement of the two factors and finalizing with their significance in policy deduction.

Factors associated with Happiness

Within their study of economics, institutions, and happiness, Frey, and Stutzer (1991) point out three significant determinants that are linked with employee happiness, which eventually builds up to job satisfaction. The first aspects that Frey and Stutzer highlight as determinants of happiness are personal factors and demographics. With this factor, a certain category of people achieves happiness due to a myriad of reasons. The second factors are micro and macroeconomic factors. High-income earners are happy, but the recent trend of salary increment has not seen employee happiness increase. Unemployment and inflation are directly related with unhappiness.

In a study carried out by Clark and Oswald (1996), income is the main significant factor that is linked with happiness and satisfaction. Motivated by the need to analyze the factor using 5000 British workers, the scholars go ahead to register findings that show the dismal role played by income when it comes to employee happiness. This, however, does not mean that job satisfaction is neglected. The survey model used by the three scholars show that employee job satisfaction was there, but it was not directly linked to the level of income that each employee was given. The contribution by the two scholars to literature review is that employee satisfaction is inversely related to their wage rates.

Gaertner (1999) uses a meta-analytical structural equation modeling (SEM) to determine the structural determinants of job satisfaction and organizational commitment to making sure that happiness is achieved. The results of their study show that only three factors, (distributive justice, promotional chances and supervisory support) showed organizational commitment towards job satisfaction. However, personal pay is also shown to play a non-significant role when it comes to job satisfaction and organizational commitment. The model of the study makes use of empirical data obtained from 9 previous studies on the same issue. The contribution to the current body of literature is that employee salary plays no vital role in happiness and job satisfaction.

Measurement of Happiness and Job Satisfaction

Measuring citizen happiness is directly linked to policy formulation. In a study carried out by Helliwell, Layard, and Sachs (2015), happiness is an element that is approached differently by each region. For instance, the model approach put into use by the European region is where the members use an approach that is deduced by the union, and data used later for comparative analysis. Within different regions, various factors are responsible for happiness. For instance, the report shows that some of the factors that separate the 10 most and 10 least happy countries include GDP per capita, life expectancy, social support, trust and freedom to make life decisions among other factors. Happiness measurement is an aspect that can be carried out using different parameters and gender. Helliwell et al. (2015) cover the issue of cost-benefit analysis using happiness as the measure. Happiness as a factor portrayed by other studies determines elements that do matter and those that do not when it comes to policy formulation. For the sake of cost-benefit during policy formulation, measuring happiness points out the key factors that need to be dealt with by relevant stakeholders in an organizational scenario. On the same subject issue, a study by Kahneman, Wakker and Sarin 1997 shows that the measurement of utility outcomes allows progressive chances of utility maximization. This is mainly through policy development.

Significance in policy deduction

As previously mentioned before, Frey and Strutzer (1991) dedicate their work to largely understanding the place of institutions when it comes to happiness and the output of organizations. The two factors pointed out are democracy and federalism where their main findings after a review of interview data carried out using 6000 people and an estimation model in data analysis shows that people tend to be happier if direct democracy is developed while the aspect of government decentralization (federalism) is upheld. The study is motivated by these two factors, and it does not fail to deliver on its mandate. Direct democracy and government decentralization mean that citizens are hands-on in the entire process, thus having their wishes fulfilled by the politicians whom they are close to and can manipulate them to implement measures that make them happy. The role of institutions is beside personal factors and demographics and economic justifications.

In a relatable study by Di Tella, MacCulloch and Oswald (2001) analyzes the role played the two factors, inflation, and unemployment, in the formulation of policies that would make people happy. Maintaining happiness of the majority with effective policies is not an aspect that can be undertaken blindly, an occurrence that prompts De Tella et al. (2001) to survey if people do really care about those two aspects before new policies are formulated. The study adopts a more complex model with surveys of individual responses being carried out to identify the place occupied by the two aspects. Unemployment and inflation, which as reflected by the study determine happiness and life satisfaction of the citizens are very much central to the political process of policy formulation.

Motivated by the aspect of Policy formulation, Oswald (1997) analyzes whether happiness and economic performance are two aspects that are correlated. Just like Di Tella et al. (2001) and Frey and Strutzer (1991), his findings shows some revelations that policy makers need to consider when establishing new legal regimes. Using an empirical model that analyzes previous studies on the subject matter, Oswalds main contribution to the existing body of literature is that high incomes have a minimal role in signaling happiness of citizens. Using the example of America, the more the country became richer, the element of happiness and life satisfaction tended to stagnate. On the contrary, upholding what the other set of scholars had already concluded or come to do so later, Oswald (1997) shows that unemployment is largely linked to unhappiness and life dissatisfaction. As such, policymakers should not concentrate on economic growth initiatives thinking that it is the perfect solution but rather concentrate on making sure that policies that support employment are ratified for citizen happiness to be achieved. In another study by Clark and Oswald (1994), the correlation between unhappiness and unemployment is deduced. By using a psychological approach, the two analyze and confirm that most young people in Britain in 1991 were contended and chose to remain unemployed because of the incentives provided by the government, especially in areas with high unemployment rates.


Clark, A. E., & Oswald, A. J. (1994). Unhappiness and unemployment. The Economic Journal, 104(424), 648-659.

Clark, A. E., & Oswald, A. J. (1996). Satisfaction and comparison income. Journal of public economics, 61(3), 359-381.

Di Tella, R., MacCulloch, R. J., & Oswald, A. J. (2001). Preferences over inflation and unemployment: Evidence from surveys of happiness. The American economic review, 91(1), 335-341.

Frey, B. S., & Stutzer, A. (2000). Happiness, economy and institutions. The Economic Journal, 110(466), 918-938.

Gaertner, S. (2000). Structural determinants of job satisfaction and organizational commitment in turnover models. Human resource management review, 9(4), 479-493.

Helliwell, J., layard, R., & sachs, J. (2015). World happiness Report 2015

Kahneman, D., Wakker, P. P., & Sarin, R. (1997). Back to Bentham? Explorations of experienced utility. The quarterly journal of economics, 375-405.

Oswald, A. J. (1997). Happiness and economic performance. The Economic Journal, 107(445), 1815-1831.


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