Long-running German panel survey shows that personal and economic choices, not just genes, matter for happiness.

Psychologists and economists take contradictory approaches to research on what psychologists call happiness or subjective well-being, and economists call subjective utility. A direct test of the most widely accepted psychological theory, set-point theory, shows it to be flawed. Results are then given, using the economists' newer "choice approach"--an approach also favored by positive psychologists--which yields substantial payoffs in explaining long-term changes in happiness. Data come from the German Socio-Economic Panel (1984-2008), a unique 25-y prospective longitudinal survey. This dataset enables direct tests of theories explaining long-term happiness.