The Easterlin Paradox

Richard Easterlin and O’Connor, Kelsey J.
Authors registered in the RePEc Author Service: Kelsey J. O'Connor

No 743, GLO Discussion Paper Series from Global Labor Organization (GLO)

Abstract: The Easterlin Paradox states that at a point in time happiness varies directly with income, both among and within nations, but over time the long-term growth rates of happiness and income are not significantly related. The principal reason for the contradiction is social comparison. At a point in time those with higher income are happier because they are comparing their income to that of others who are less fortunate, and conversely for those with lower income. Over time, however, as incomes rise throughout the population, the incomes of one's comparison group rise along with one's own income and vitiates the otherwise positive effect of own-income growth on happiness. Critics of the Paradox mistakenly present the positive relation of happiness to income in cross-section data or in short-term time fluctuations as contradicting the nil relation of long-term trends.

Keywords: Easterlin Paradox; economic growth; income; happiness; life satisfaction; subjective well-being; long-term; short-term; trends; fluctuations; transition countries; less developed countries; developed countries (search for similar items in EconPapers)
JEL-codes: D60 I31 O10 O5 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-hap, nep-hpe and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Working Paper: The Easterlin Paradox (2020)
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