Easterlin paradox

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The Easterlin Paradox is a hypothesis about the relationship between income and happiness . It was first published in 1974 by economist Richard Easterlin in an essay entitled Does Economic Growth Improve the Human Lot? released. Richard Easterlin proved that the increase in gross domestic product is positively correlated with a subjective feeling of happiness , but above a certain threshold it is no longer necessarily associated with an improvement in the subjective feeling of happiness.

Easterlin's thesis

Easterlin examined 30 surveys from 19 countries from the period from 1946 to 1970. He observed a weaker relationship between subjective happiness and income in international comparisons than in intra-national comparisons. He also found on the basis of an intertemporal study that Americans did not become happier in the period under study, despite income increases. Easterlin cited as a possible explanation that relative income is a better predictor of subjective satisfaction than absolute income. He repeated his study several times in the following decades and each time came to the same result.

A common interpretation of these results is: "When basic needs are met, more wealth does not lead to more happiness."

Reception, criticism and further research

In 1997, the economist Andrew Oswald published an analysis of income and surveys on subjective life satisfaction. He found that increases in income in the USA and Europe increased subjective life satisfaction, but had only a minor effect.

The economist Michael Hagerty and the sociologist Ruut Veenhoven published a paper in 2003 in which they presented analyzes contradicting the Easterlin paradox. Using more recent data, they found that people were getting happier in countries with increasing incomes. In response, Easterlin accused the authors of using inadequate data.

The economists Justin Wolfers and Betsey Stevenson published a paper in 2008 in which they questioned the Easterlin paradox. They analyzed all data on happiness and income in comparisons between rich and poor within a society, in comparisons between poor and rich countries, and in intertemporal comparisons. It was shown that the relationship between subjective happiness and income is very similar for intranational, international and intertemporal comparisons. These results contradict those of Easterlin, whose paradox is based on the assumption that intranational comparisons mean greater differences in happiness than international comparisons, or that relative income is more important for satisfaction than absolute income. In countries such as Japan or Europe, subjective satisfaction increased along with average per capita income. Also, the increase in happiness was greater when the income growth was greater.

In 2010 Easterlin presented a new study that confirms his thesis. With a team he had examined developments in 37 countries over an average period of 22 years, including for the first time developing countries and Eastern European countries in the transition to a market economy.

Another approach to solving the paradox are adjustment level theories to an individual “happiness zero point” to which individuals would return sooner or later after strongly positive or negative life events. According to Easterlin, however, theories about such a hedonistic treadmill apply less to monetary goods than to non-monetary goods, which confirms his paradox.

literature

  • Richard A. Easterlin: Does Economic Growth Improve the Human Lot? In: Paul A. David & Melvin W. Reder (eds.): Nations and Households in Economic Growth: Essays in Honor of Moses Abramovitz. Academic Press, New York 1974, pp. 89–125 ( PDF; 1.31 MB )

Web links

Individual evidence

  1. ^ Richard Easterlin: Income and Happiness: Towards a Unified Theory . In: The Economic Journal . tape 111 , 2001, p. 465-484 .
  2. ↑ Carol Graham: Happiness and Health: Lessons - And Questions - For Public Policy. In: Health Affairs. Vol. 27, No. 1, January / February 2008, pp. 72–87 ( PDF; 158 kB )
  3. ↑ Andrew J. Oswald: Happiness and Economic Performance. In: Economic Journal. Vol. 107, 1997, pp. 1815–1831 ( PDF; 103 kB )
  4. ↑ Michael R. Hagerty & Ruut Veenhoven: Wealth and Happiness Revisited. In: Social Indicators Research. Vol. 64, 2003, pp. 1–27 ( PDF; 761 kB )
  5. ^ Richard A. Easterlin: Feeding the Illusion of Growth and Happiness: A Reply to Hagerty and Veenhoven. April 2, 2004 ( PDF; 228 kB )
  6. ↑ Betsey Stevenson & Justin Wolfers: Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox. In: Brookings Papers on Economic Activity. Spring 2008 ( PDF ( Memento from April 22, 2008 in the Internet Archive ); 2.12 MB)
  7. ↑ Betsey Stevenson on the Easterlin Paradox in Nightline , June 12, 2008 (video; 5:26 min)
  8. ↑ Interview with Wolfers and Stevenson in the CNBC telecast Street Signs, September 2008 (video, 3:31 min)
  9. ^ Richard A. Easterlin, Laura Angelescu McVey, Malgorzata Switek, Onnicha Sawangfa & Jacqueline Smith Zweig: The happiness-income paradox revisited. In: Proceedings of the National Academy of Sciences . 2010 ( doi : 10.1073 / pnas.1015962107 )
  10. ↑ Christian Weber: Prosperity and happiness - at some point it will be enough . In: Süddeutsche Zeitung . December 14, 2010
  11. ↑ Lea Wolz: Growing prosperity: happiness cannot be bought . In: stern.de . December 14, 2010
  12. ^ Richard Easterlin: Building a Better Theory of Well-Being (PDF; 785 kB). In: Economics and happiness: framing the analysis. 2007