Happiness is a Leading Indicator of Key Economic Markers Such as Housing, Retail Sales

In the midst of an ongoing global discussion among proponents of “behavioral economics,” Prosper Insights & Analytics provides support that happiness is a leading indicator of key economic markers such as government housing starts, industrial production, real income, employment and real retail sales. The discovery is based on an ongoing in-​depth review of three years of happiness data and longitudinal time-​series data from multiple government sources. The first in a sequence of releases regarding the relationship between happiness and the economy focuses on housing. New house

The correlation was examined between the Happiness Score (which is a composite measure of the current state of U.S. consumer happiness across ten aspects of life) and thousands of government data points, resulting in more than 6,000 correlation coefficients. The observations were time shifted one month (with happiness leading) and relationships were identified with people’s overall happiness and New Private Housing Permits (r=.79), New Private Housing Starts (r=.75), and New Private Housing Under Construction (r=.61).

Relationships with family and friends, home life and religion rate the highest among aspects that make up Americans' overall happiness score.  Feelings toward the government have trended low over the years; it rounds out the bottom at 17.5%.

As part of the analytical effort, correlations between government housing data (including permits, starts and under construction) and the University of Michigan’s Consumer Sentiment Index were also calculated. Interestingly, no significant relationship was found between the two variables either matched or time shifted one month with consumer sentiment leading.

Our happiness research is part of a larger effort to find relationships with social or commercial value from a very large set of data items from public and private sources,” said Michael Perkins, Ph.D., Chief Scientist, Prosper Technologies.

[Source:  "The Happiness Score."  Prosper Insights & Analytics.  18 Feb. 2013.  Web.  19 Feb. 2013.]