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The Easterlin illusion: economic growth does go with greater happiness

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  • Ruut Veenhoven
  • Floris Vergunst

Abstract

The 'Easterlin Paradox' holds that economic growth in nations does not buy greater happiness for the average citizen. This thesis was advanced in the 1970s on the basis of the then available data on happiness in nations. Later, data have disproved most of the empirical claims behind the thesis, but Easterlin still maintains that there is no long-term correlation between economic growth and happiness. This last claim was tested using the time trend data available in the World Database of Happiness, which involve 1,531 data points in 67 nations that yield 199 time-series ranging from 10 to more than 40 years. The analysis reveals a positive correlation between GDP growth and rise of in happiness in nations. Both GDP and happiness have gone up in most nations, and average happiness has risen more in nations where the economy has grown the most; r = +0.20 p < 05. On average a 1% growth in income per capita per year was followed by a rise in average happiness on scale 0-10 of 0.0034; thus, a gain in happiness of a full point would take 60 years with an annual economic growth of 5%.

Suggested Citation

  • Ruut Veenhoven & Floris Vergunst, 2014. "The Easterlin illusion: economic growth does go with greater happiness," International Journal of Happiness and Development, Inderscience Enterprises Ltd, vol. 1(4), pages 311-343.
    • Handle: RePEc:ids:ijhdev:v:1:y:2014:i:4:p:311-343
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    References listed on IDEAS

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    1. Richard Easterlin, 2005. "Feeding the Illusion of Growth and Happiness: A Reply to Hagerty and Veenhoven," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 74(3), pages 429-443, December.
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    More about this item

    Keywords

    economic growth; trends; cross national survey; progress; greater happiness; Easterlin Paradox; GDP growth; average happiness.;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • Z10 - Other Special Topics - - Cultural Economics - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • A10 - General Economics and Teaching - - General Economics - - - General
    • H00 - Public Economics - - General - - - General

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