Chapter 2This is the paradox first identified by Richard Easterlin as
long ago as the 1970s.^17 The paradox contrasts two stylized
facts:
- Within a country at a point in time, richer people
are on average happier. - Within a country over time, as everyone has be-
come richer, people have not become happier.
The first of these stylized facts is certainly true, as we have
seen. The second is true of some countries, but not all. On
average world happiness has indeed risen, and at the same
time the world has become richer. But has happiness in-
creased more in those countries where economic growth
has been higher? The answer here is a matter of dispute.^18 If
we look only at countries with long series of data on hap-
piness, there is no relationship between economic growth
and increases in happiness, whether the countries are all
rich or all poor, or mixed. Indeed in China, which has ex-
perienced the fastest growth of any major country, happi-
ness is the same now as in 1990.^19 However the analysis is
different if we include countries with shorter time- series—
but in shorter time series it becomes difficult to disentangle
the cyclical effects of boom and bust on happiness (which
certainly exist) from the effects of the long- term rate of eco-
nomic growth.
In any case none of us lives in an average country; and in
the many countries to which the Easterlin paradox applies
it is important to understand why this has been the case.
There could of course be many adverse factors that have off-
set the undoubted benefits an individual obtains from in-
creased income.^20 But there are two general factors intrinsic