Thursday, May 06, 2010

The Easterlin Paradox - The Foundation of Macro Happiness Studies

I am working my way through the mountain of research in the past generation on happiness. Half of it is micro work done by psychologists. The other half are macro studies done by economists. We sociologists have some catching up to do.

The foundation of macro happiness studies is Richard Easterlin's finding that richer nations are happier, but the richer people in them are not.

When you plot income against happiness, the curve goes up steeply to about the mid-point, then flattens out, kind of like a small r. This curve is the same for individuals within a nation, and for nations as a whole.

Some researchers I respect say that there isn't really a paradox, because the curve does not flatten (as much) if you measure percentage change in income, instead of absolute increases. I will ponder over those claims hereafter.

The basic finding of the Easterlin paradox makes sense to me. From poor to average, more money really does make your life easier and opens other options. From middle to the Gatesian stratosphere of income, though, more money does not add big increments of happiness. Richer nations are happier because the people who are relatively poor live decent lives, materially, whereas the poorest people in desperately poor nations are really badly off.

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