The Easterlin Paradox: Misconceptions about Economic Growth and Happiness

The Easterlin Paradox refers to the apparent contradiction between the cross-sectional and time-series relationships between GDP per capita and evaluative happiness – at a point in time, countries with greater GDP per capita are on average happier, but over time, long-run GDP growth does not correlate meaningfully with long-run happiness growth. Yet not everyone agrees. After more than fifty years since Easterlin's original article, the Paradox remains controversial and is frequently misunderstood. This article reviews the evolution of the Easterlin Paradox and briefly discusses its modern definition, explanations, best practices for testing, empirical extensions, and common misconceptions and critiques, with particular attention on methodology. Recent evidence indicates there is a broad range of long-run happiness changes, but these changes do not meaningfully correlate with long-run GDP growth rates, even in less developed countries. The implications are part of why the Paradox is so controversial. Economic growth alone does not constitute development or societal progress. In Easterlin’s words, it is time to move on [beyond GDP] and discover what explains why happiness grew in some countries and not others.