Economics is undergoing a remarkable new development, which may even be called revolutionary. This development is likely to change economics substantially in the future. New insights from happiness research are slowly being accepted in standard economics, a field which is traditionally conservative. If the goal of most human beings is to be happy, then a fuller understanding of which factors contribute to well-being is critical, especially if recent findings on what determines happiness are at variance with standard economic theories. Happiness research is even more important in helping to determine which institutional forms best enable individuals to increase their life satisfaction.