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A new happiness equation: Worker + happiness = improved productivity

In a series of experiments, Andrew Oswald, Eugenio Proto, and Daniel Sgroi explore the powerful interplay of human emotion and worker productivity.

Nothing contributes more to a society’s well-being than productivity. Economists have long analysed ways to boost productivity through improved skills and education, changing technologies and uses of capital. Our recent research investigates an important but often overlooked ingredient, that of human emotion. Our research, simply put, asks the question: “Does happiness make people more productive workers?”

Our findings respond to this question with a resounding yes. We find that human happiness has large and positive causal effects on productivity. Positive emotions appear to invigorate human beings, while negative emotions have the opposite effect. We find that happier workers’ effort levels go up, while their precision is unaltered. At the same time, we find that unhappiness stemming from deaths or serious illness of family members reduces productivity to a striking degree. Happier workers, our research found, were 12 percent more productive. Unhappier workers were 10 percent less productive. We also find that the recent divorce of parents of university students did not affect happiness levels or students’ productivity.

In our research, we conducted randomized trial experiments involving paid piece rate work. In one experiment, we “assigned” happiness in the laboratory, to see whether happiness induces better intrinsic motivation or instead promotes less careful behaviour. In a second experiment we took advantage of real-life shocks, stemming from bereavement and family illness, to measure any difference unhappiness makes in worker output. In a third experiment, we explored whether university subjects’ productivity was affected by their parents’ recent divorce.

A happiness “treatment” raised productivity by 12 percent; traumas, such as a family member’s death or illness, lowered it by 10 percent

The subjects of our experiments were Warwick University students who were asked to add a series of five two-digit numbers in 10 minutes. The task is a simple one, but taxing under time pressure. It might be thought of as representing an iconic white collar job, though admittedly in a highly stylized way. Both intellectual ability and effort are rewarded. The subjects were paid a show-up fee and a performance fee based on the number of correct answers.

Some subjects were shown a 10-minute movie based on comedy routines enacted by a well-known British comedian. The comedy movie clip succeeded in raising the reported happiness levels of those who saw it, as compared with those who did not see a film or who saw a “placebo” film, a clip depicting patterns of colour sticks. Among the subjects who reported higher happiness levels after seeing the comedy, productivity was significantly higher, 12 percent higher than the productivity of the other subjects, for both men and women. The subjects who watched the movie but did not report higher levels of happiness did not demonstrate higher levels of productivity. As a result, the increase in productivity seems to be linked to the increase in happiness, not merely to the watching of the comedy movie per se.

Experiments “assigned” happiness in the laboratory and exploited real-life traumas, such as the death or illness of a family member

Furthermore, we show that this increase in performance is exclusively achieved through an increase in the number of attempted additions, while the probability of being correct when carrying out each addition is unaffected. Hence, we argue that the effect on productivity works through increased effort rather than ability.

This distinction is of interest. It might be viewed as one between industry and talent, between the consequences of happiness for pure effort compared to effective skill. In our second experiment, we asked our subjects to complete the same tasks, and then to report whether they had experienced a death or illness in their families. Those who had experienced a death or illness in their families within the past two years performed 10 percent worse than others, our data show. Given the extraordinarily homogeneous sample of our subjects, the difference in productivity was unexpectedly striking.

One exception to our findings concerns the subject of parental divorce. Though the effects of divorce have been widely studied, we believe our experiment is the first to probe the influence of parental divorce on the productivity of university students. Students whose parents have recently divorced did not report being less happy than others in the study, and they did not demonstrate reduced productivity. Though we do not know why this was the case, we surmise that divorce may well be harder to classify as a “negative life event” in the sense that it might have been perceived by our subjects as a release from a more difficult situation and may also have been a longer-term issue granting additional time for the subjects to get used to the situation.

Our results on these fronts should provoke thought among scholars in psychology and economics and in the business community. If happiness in the workplace brings increased returns to productivity, then human resource departments, business managers and the architects of promotion policies will want to consider the implications.

Publication details

This article synthesizes aspects of three papers: Happiness and Productivity, IZA (Institute for the Study of Labor in Bonn, Germany) Discussion Paper No. 4645; Are Happiness and Productivity Lower among University Students with Newly-Divorced Parents? IZA Discussion Paper No. 4755; and Happiness, Priming and Life Satisfaction: A case for the reliability of subjective wellbeing indices, The Warwick Economic Research Papers no. 935.

The authors

The authors are members of the Warwick University Economics Department. Andrew Oswald is an economics professor and pro-dean of research at Warwick Business School. Eugenio Proto is associate economics professor. Daniel Sgroi is the Leverhulme assistant professor of Industry and Organization.