The paper shows that macroeconomic movements significantly affect national happiness. It finds that happiness levels in Europe and the US are influenced by income, with happiness increasing monotonically with income. Happiness data are correlated with macroeconomic variables like GDP, even after controlling for personal and country characteristics. Recessions cause significant psychic losses beyond GDP declines and unemployment increases. The welfare state appears to compensate for these losses, with higher unemployment benefits associated with higher national well-being. The paper challenges the traditional view that business cycles have minimal costs, arguing that psychic costs are substantial. It also finds that happiness is influenced by factors like employment status, income, and marital status. The study uses data from surveys to estimate the effects of macroeconomic variables on well-being, finding that GDP growth and unemployment rates have significant impacts. The paper concludes that macroeconomic factors have strong effects on happiness, and that the costs of recessions are substantial, including both direct and indirect effects. The findings suggest that well-being data can provide valuable insights into the economic impacts of macroeconomic fluctuations.The paper shows that macroeconomic movements significantly affect national happiness. It finds that happiness levels in Europe and the US are influenced by income, with happiness increasing monotonically with income. Happiness data are correlated with macroeconomic variables like GDP, even after controlling for personal and country characteristics. Recessions cause significant psychic losses beyond GDP declines and unemployment increases. The welfare state appears to compensate for these losses, with higher unemployment benefits associated with higher national well-being. The paper challenges the traditional view that business cycles have minimal costs, arguing that psychic costs are substantial. It also finds that happiness is influenced by factors like employment status, income, and marital status. The study uses data from surveys to estimate the effects of macroeconomic variables on well-being, finding that GDP growth and unemployment rates have significant impacts. The paper concludes that macroeconomic factors have strong effects on happiness, and that the costs of recessions are substantial, including both direct and indirect effects. The findings suggest that well-being data can provide valuable insights into the economic impacts of macroeconomic fluctuations.