Happiness is generally considered to be an ultimate goal in life; virtually everybody wants to be happy. The United States Declaration of Independence of 1776 takes it as a self-evident truth that the “pursuit of happiness” is an “unalienable right”, comparable to life and liberty. It follows that economics is – or should be – about individual happiness. In particular, the question is how do economic growth, unemployment and inflation, as well as institutional factors such as good governance, affect individual well-being? In addition to this intrinsic interest, there are three major reasons for economists to consider happiness. The first is economic policy. At the micro-level, it is often impossible to make a Pareto-optimal proposal, because a social action entails costs for some individuals. Hence an evaluation of the net effects, in terms of individual utilities, is needed. On an aggregate level, economic policy must deal with trade-offs, especially those between unemployment and

This paper relates a series of current development in the literature of economics and psychology as they relate to decision making by households and business firms. The first part of the paper reviews recent literature dealing with happiness and subjective wellbeing. In the second part of the paper recent developments in management science that make use of intuition and mental focus are related to firm profitability and improved economic efficiency. Both of these recent developments can provide critical insights into improving the “bottom line ” performance of policy makers, managers and society as a whole at both the macroeconomic and microeconomic levels. These ideas are then used to design to and develop a series of policy suggestions that refocus attention on the concept of subjective well being or happiness as opposed to economic utility maximization as well as the role of intuition and the concept of “flow ” in the decision making process. of top managers. We can summarize these ideas succinctly by focusing on two sets of variables relating to decision making and decision outcome in a two by two matrix summarized in the Table