Strong Correlation Exists between Happiness & Key Economic Indicators

WORTHINGTON, OH – 2/18/13 – 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.

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).

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.

About the Report:

Government data was obtained from the Economic Indicators InsightCenter™. Sources of information include the Census Bureau, Bureau of Labor Statistics, Bureau of Economic Analysis, and the Board of Governors of the Federal Reserve System.

The Happiness Score has been tracked since February 2010. Respondents are asked to rate their happiness level on a scale of 1-5 with 1 being “totally unhappy” and 5 being “totally happy” for ten different aspects of their lives including health; relationships with family and friends; home, work and love lives; religion; housing; neighborhood and government.

For a complimentary copy of the special report, including additional correlations and methodology: CLICK HERE.

Prosper Insights & Analytics™

Prosper Insights & Analytics provides advanced business intelligence using sophisticated analytical software to examine big datasets and provide answers to executives via its cloud-based InsightCenter™ platform powered by Prosper Technologies. By integrating a variety of data including economic, behavioral and attitudinal data, Prosper Insights & Analytics delivers insights for executive decision making. Further, it is continually identifying unique insights through analytics to enable marketers to make knowledge-based decisions rather than relying on intuition. To learn more:

Chrissy Wissinger, Senior Manager, Communications
Dianne Kremer, Senior Analyst

Happy People Buy Houses, According to New Discovery by Prosper Insights & Analytics™