The paradox is named after its founder a researcher known as Richard Easterlin and it explores various aspects of Happiness economics. The paradox explains that in life happiness differ depending on the income available in nations and also among people. The author explains that as income grows happiness increases. On the contrary he states that it reaches a point in life when happiness stops to grow upwards even with increase in income. Although there are various theories that have been discussed to explain the paradox, the paradox itself is an empirically broad. It has also gone through various criticisms from researchers in the field of study and beyond. The paradox was founded based on the data and statistics of America and extended towards other developing countries that were critical in supporting the findings. Additionally, as time progressed the less developed countries were incorporated as well as those transitioning from social economic set up to that of capitalism. The findings for happiness were initiated from 1946 through 2014 ( Ortiz-Ospina & Roser 2013). The rates of happiness depicted a flat and even negative curve several years before it eventually tripled ( Ortiz-Ospina & Roser 2013).
The time series in the analysis of the paradox references long term trends which have factored in booms and slumps as well as the expansions and contractions in national incomes. The two critical findings that Easterlin settled on are; the rich people in a country are often happier than the poor who inhabit the same country. Secondly, he contradicts his statement by explaining that the people who lived in richer nations were really not happier than those who are in poorer nations. It is this paradox that the research is founded on and referred to as the Easterlin Paradox. It is a contraction of people in rich nations being happy and also not being happier than those in poorer countries. Through Easterlin Paradox many reserachers have come to conclude that as long as people have met their basic needs more income do not increase happiness.
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According to Easterlin there were times in the seventies when American economy was steadily growing but the happiness among people remained the same. In this regard the Easterlin paradox states that “a point in time happiness varies directly with income both among and within nations, but over time happiness does not trend upward as income continues to grow”(UKRI.org n.d). The paradox seeks to explain that there is no relationship between economic progress and development of a nation and the happiness of its people. Although the economic progress of a nation has been regarded as a critical objective of growth policy and plan there are scholars such as Easterlin among others who contend that the rise in living standards do not determine the well being of people (Stevenson & Wolfers 2008) . It is in this regard that he uses a paradox to first explain the rational thoughts of the general society and contrast it with the truth hence makes his statement a paradox. Easterlin in his literature has analyzed the connection between gross domestic product and happiness across countries and over time where he finds a significant correlation between. In contrast the author elucidates that although wealth is a critical predicator for personal happiness it is insignificant for standard happiness (Stevenson & Wolfers 2008) .
Some of the theories that have been used to explain the aspect of happiness include the Eastern paradox theory states that happiness might not tend to increase with increase in income. But it is also a determinant of happiness to a certain level within which there will be no increase with increase in income. According to the Set point model which explains that the level of happiness is based on the daily activities that people engage and can be expressed in various ways such as emotions and mood among others. The determinants of happiness include; monetary gains, increments in salary and remuneration, cognitive factors among other which may directly have an impact on the daily life of an individual. The model explains that there might be unlimited number of determinants to happiness and therefore cannot be limited to only wealth as Easterlin states.
Figure 1 source ( Easterlin & Angelescu 2009)
The figures above indicate the rise in satisfaction with increase in income to certain level with which it stagnates with no further increase in satisfaction even with increase in income. The graph is a clear explanation of Easterlin’s paradox which on one hand income brings satisfaction as seen with the rise in the level of satisfaction in the figure above. On the contrary it does not determine happiness even with increase in income therefore bringing the paradox.
There are criticisms from scholars such as Betsey Stevenson and Justin Wolfers who argue that both rich nations and rich people develop subjective well being and they experience happiness with increase wealth compared to poor people and poor nations. Additionally, there seems to be no level of maximum satisfaction as people continue to experience higher subjective well being with every increase in their income even when they have achieved all their basic needs. The authors argument contradicts Easterlin’s paradox which has a maximum level of satisfaction after which there is no satisfaction.
In conclusion it is important to note that Easterlin’s paradox is a significant model in studying the relationship between wealth and happiness not only among people but also among nations. Despite the author explaining that happiness increases with income he also explains that it reaches a point when such satisfaction increases no more even with an increment in income.
References
Clark, A. E. (2016). Adaptation and the easterlin paradox. In Advances in happiness research (pp. 75-94). Springer, Tokyo.
Easterlin, R. A., & Angelescu, L. (2009). Happiness and growth the world over: Time series evidence on the happiness-income paradox.
Ortiz-Ospina, E., & Roser, M. (2013). Happiness and life satisfaction. Our World in Data . https://ourworldindata.org/happiness-and-life-satisfaction#citation
Stevenson, B., & Wolfers, J. (2008). Economic growth and subjective well-being: Reassessing the Easterlin paradox (No. w14282). National Bureau of Economic Research.
UKRI.org (n.d)The Easterlin Paradox Retrieved from https://esrc.ukri.org/about-us/50-years-of-esrc/50-achievements/the-easterlin-paradox/#:~:text=The%20'Easterlin%20Paradox'%20states%20that,as%20income%20continues%20to%20grow .
