Thursday, November 4, 2010

Easterlin Paradox

The data I presented in class about happiness is actually so well discussed that it has its own name - The Easterlin Paradox

1) Within a society, rich people tend to be much happier than poor people.
2) But, rich societies tend not to be happier than poor societies
3) As countries get richer, they do not get happier.

Richard Easterlin offered one explanation to his paradox, arguing that only relative income matters to happiness not absolute income.

Recently two young economists from the University of Pennsylvania presented a rebuttal of the paradox arguing that money indeed tends to bring happiness, even if it doesn’t guarantee it. This debate, with a response Richard Easterlin is nicely summarized in a NY Times article, Maybe Money Does Buy Happiness After All. For a more in depth analysis the Freakonomics blog had a six part series on the economics of happiness which reanalyzes the traditional story.

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