Does Money Make People Happy?

Richard Easterlin

Chapter 3 in An Economist’s Lessons on Happiness, 2021, pp 19-32 from Springer

Abstract: Abstract This is a surprise—the evidence is that more money does not make people happier. In the United States, for example, the purchasing power of people’s incomes has, on average, tripled over the past 70 years, but happiness has been constant or even declined. Yet, in any given year, if we compare Americans with higher and lower income, the more affluent are happier. This is the paradox of happiness and income: at a point in time, happiness, on average, is greater for those with more income, both within and among nations; over time, however, happiness does not increase as incomes generally rise. An important reason for the paradox is what psychologists call “social comparison”; our satisfaction with our income depends on how it compares with the incomes of others. Social comparison can account for the seemingly contradictory point-of-time and over-time relationships.

Date: 2021
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DOI: 10.1007/978-3-030-61962-6_3

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