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The Easterlin Paradox

'In the field of economics, it used to be that the pursuit of happiness was left up to the free market. A fundamental tenet was that the way to achieve well-being ( or “utility” ) is through economic growth. In the case of individuals, raise your income. In the case of nations, pump up the GDP ( to allow citizens to aquire more utility ). The first important ( and largely ignored ) challenge to those assumptions was a seminal 1974 study of the relationship between economic growth and well-being by USC economic historian Richard Easterlin. Easterlin found that above a very low level, economic growth does not seem to improve welfare. His explanation, known as the “Easterlin paradox,” was that, because people judge themselves in relation to others, any real jump in income makes little difference in how they feel about themselves. Having more isn't enough – unless someone else has less. Even gains in relative income make little difference: We just compare ourselves to a higher standard. The more we have, the more we want. And the less happy we become.'

– Polly LaBarre

(NOTE: maybe the consult the Four Noble Truths to help resolve this paradox)

easterlin_paradox.txt · Last modified: 2007/06/09 16:29 (external edit)