Governments widely manipulate official economic and social data—but the public tends to disregard this fact. There is extensive empirical evidence that governments extensively manipulate official data. National statistical offices should be independent of their government to fight such manipulation, and alternative data producers should be supported. The public should be aware of data that government find difficult to control, such as those on the black market or light intensity captured by satellites as an indicator of income level.

Economists have long considered themselves fortunate that micro-economic theory needs only be based on relative utility, as it is widely believed that utility is not measurable in absolute terms. But this view is no longer valid. The measurement of happiness constitutes a good approximation to utility. It is shown that research on happiness provides new evidence on important issues of economic theory and policy. In particular, it is shown how unemployment, income and inflation affect self-reported subjective well-being. The results are partly in line with accepted economics but partly throw doubt on it. Institutions, such as the type of democracy and the extent of political decentralisation, also systematically affect individual happiness.