How does economic life affect psychological well-being?

Arkadiusz Sieroń

Chapter 4 in Rationality, Psychology and Capitalism, 2026, pp 77-105 from Edward Elgar Publishing

Abstract: It is clear that, on the one hand, psychological factors affect the people's economic well-being and that, on the other hand, economic life affects the psychological well-being of the people. However, some researchers pose a more nuanced thesis – i.e., that capitalism negatively affects the mental health of the people, through alienation, domination, exploitation, and unequal income and wealth distribution. This chapter reveals that such claims do not stand up to careful examination and are not supported by empirical data. The fact that some negative psychological and social problems exist in modern capitalist economies does not mean that they are caused by capitalism or are inherent to this economic system. They can result from living in civilization, hierarchical societies, and a specific culture, or from some societal changes. Blaming capitalism for almost all social ills is a causal over-simplification fallacy. The chapter also argues that the GDP should not be replaced by some happiness index. This is because it is far from obvious why happiness should be people's ultimate goal, and whether it would be possible to implement ethical policy based on happiness. Happiness would also be a very problematic social goal because it is not clear what it is, how to achieve it, and how to measure it. After all, as economics teaches, utility (or happiness in this case) is subjective and ordinal, and it cannot be objectively measured.

Keywords: Capitalism; Happiness; Happiness Economics; Mental Health; Social Status; Subjective Well-being (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035394005
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