This paper provides evidence from a natural experiment on the relationship between positive affect and productivity. We link highly detailed administrative data on the behaviors and performance of all telesales workers at a large telecommunications company with survey reports of employee happiness that we collected on a weekly basis.

We use variation in worker mood arising from visual exposure to weather—the interaction between call center architecture and outdoor weather conditions—in order to provide a quasi-experimental test of the effect of happiness on productivity.

We find evidence of a positive impact on sales performance, which is driven by changes in labor productivity – largely through workers converting more calls into sales, and to a lesser extent by making more calls per hour and adhering more closely to their schedule. We find no evidence in our setting of effects on measures of high-frequency labor supply such as attendance and break-taking.

Introduction

A large number of employers are increasingly claiming to care about how their employees feel at work, and have begun to invest in management and organizational practices aimed at creating and maintaining a happier workforce. There may be various reasons for this – such as an increased ability to attract and retain high quality workers – but at least one motivation is a belief that happier workers will be more productive. When surveyed, for example, around 79% of U.S. managers reported an expectation that unhappiness in their workforce is likely to hurt productivity