Easterlin Paradox

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Easterlin Paradox

The Easterlin Paradox suggests that a society's economic development and its average level of happiness are not linked. The concept is named for the economist Richard Easterlin who teaches and researches at the University of Southern California. In his 1974 paper "Does Economic Growth Improve the Human Lot? Some Empirical Evidence"[1], he described how some of the drawbacks of economic progress and growth might diminish some of the positive effects of happiness caused by this very same growth. Easterlin found that within a given country people with higher incomes are, in average, happier. In international comparison however, the average level of happiness reported by people does not vary much with national income per person, at least for countries with income sufficient to meet basic needs. Within the same country but seen over time, similar effects were observed. Average income per person rose steadily in the United States between 1946 and 1970 but happiness showed no positive long-term trend and even declined between 1960 and 1970.

In 2001 and 2008, researchers provided counter evidence to the Easterlin paradox[2]. Justin Wolfers shows that the Easterlin paradox is no paradox but that richer countries are happier and richer people are happier. Furthermore, there is not wealth threshold where people do not get happier anymore. [3]

Professor Easterlin himself present in 2009 a study that reaffirmed the absence of a significant relationship between the improvement in happiness and the long term rate of growth of GDP per capita. The study analyses 17 developed, 9 developing and, 11 transition countries in three groups and taken together (see graph). The explanation for the contradictory results found in other studies is, according to the 2009 paper, that "time series studies [...] confuse a short-term positive association between the growth of happiness and income, arising from fluctuations in macroeconomic conditions, with the long/term relationship, which is nil."[4]

 

Easterlin Graph.PNG

 

Source of Graph: Easterlin and Angelescu, 2009, p.24[5]

See also

Happiness
Progress
GDP

Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox

References

  1. Easterlin, Richard A. (1974) "Does Economic Growth Improve the Human Lot?" in Paul A. David and Melvin W. Reder, eds., Nations and Households in Economic Growth: Essays in Honor of Moses Abramovitz, New York: Academic Press, Inc.Available at: http://graphics8.nytimes.com/images/2008/04/16/business/Easterlin1974.pdf
  2. Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox and http://www2.eur.nl/fsw/research/veenhoven/Pub2000s/2003e-full.pdf
  3. Josh Rothman, "Easterlin Paradox Revisitied", on The Boston Globe, Brainiac on 8 July 2011, accessed on 13 July 2011: http://www.boston.com/bostonglobe/ideas/brainiac/2011/07/easterlins_para.html
  4. Richard A. Easterlin and Laura Angelescu, "Happiness and Growth the World Over: Time Series Evidence on the Happiness-Income Paradox", IZA Discussion Paper No. 4060. Available at: http://ftp.iza.org/dp4060.pdf
  5. Richard A. Easterlin and Laura Angelescu, "Happiness and Growth the World Over: Time Series Evidence on the Happiness-Income Paradox", IZA Discussion Paper No. 4060. Available at: http://ftp.iza.org/dp4060.pdf

 

 

 

External links

Guardian article on "Happiness doesn't increase with growing wealth of nations, finds study"