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 vitiate 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 series fluctuations as contradicting the nil relation of long-term trends.
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Acknowledgments
Responsible Section Editor: Milena Nikolova. The authors would like to thank the editors and anonymous referees for helpful comments, and Gallup for providing access to their valuable World Poll data. O’Connor acknowledges financial support of the Observatoire de la Compétitivité, Ministère de l’Economie, DG Compétitivité, Luxembourg, and STATEC. Views and opinions expressed in this article are those of the authors and do not reflect those of STATEC, or funding partners. The authors declare that they have no conflict of interest.
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Easterlin, R.A., O’Connor, K.J. (2022). The Easterlin Paradox. In: Zimmermann, K.F. (eds) Handbook of Labor, Human Resources and Population Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-57365-6_184-2
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The Easterlin Paradox- Published:
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DOI: https://doi.org/10.1007/978-3-319-57365-6_184-2
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The Easterlin Paradox- Published:
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DOI: https://doi.org/10.1007/978-3-319-57365-6_184-1