“Every day, in every industrialized country of the world, journalists and politicians give
out a conscious and unconscious message. It is that better economic performance means
more happiness for a nation. This idea is rarely questioned. We feel we would be more
cheery if our boss raised our pay, and assume that countries must be roughly the same.
The results in this paper suggest that, in a developed nation, economic progress buys
only a small amount of extra happiness.“ (Oswald 1997, p. 1827)
Based on Oswald’s introductory statement, this paper is going further than refuting the assumption that a
certain kind of utility is solely contingent on absolute earnings. With the interpretation
of utility as happiness, it would mean for the aggregate economy as well as for the
individual that income secures happiness with a rising tendency. Having started with
Oswald, another economist with well-known findings has to be made mention of:
Richard Easterlin, who constructed the hypothesis that from a certain threshold of
developmental achievements on, economic growth is of minor significance to the overall
life satisfaction of a nation. The so-called Easterlin paradox originally arose as data on
richer citizens within a country displayed a higher level of subjective well-being and led
to the assumption that “economic growth improve[s] the human lot” (Easterlin 1974).
Nevertheless, a comparison amongst well-developed states and over time revealed that
there’s little difference of each population with regard to happiness. Thus, it appears
that not the absolute but relative wealth is of import to life satisfaction in crossindividual
and cross-stratum comparisons. Even though it never gained as much
attention as its foreshadowing counterpart by Easterlin, the phenomenon is also
denoted as the “relative deprivation theory” (Oswald 1999, p. 360), pointing out the
state of deprived happiness poorer individuals in a society suffer.
Table of Contents
1. Introduction
2. Economic growth and happiness
2.1 Happiness
2.2 The Easterlin paradox
2.2.1 Within-country comparisons
2.2.2 Cross-country comparisons
2.2.3 Time-series data
2.2.4 Conclusion
2.3 Social comparison and relative income hypothesis
2.4 Adaptation effect and hedonic treadmill
2.5 Conclusion
3. Alternatives to the neoclassical growth paradigm
3.1 Neoclassical economics and the growth model
3.2 Jevon’s paradox and uneconomic growth
3.3 Dematerialization and decoupling
3.4 Economic degrowth, developed nations and policy implications
4. Degrowth policy and prosperity
4.1 Government and policy
4.2 Feasibility of degrowth and social change
4.3 Normativity, sustainability accounts and institutions
5. Conclusion
Objectives and Research Focus
This paper examines whether the Easterlin paradox—the finding that economic growth does not necessarily lead to increased national happiness beyond a certain developmental threshold—provides a legitimate basis for implementing degrowth policies in developed nations, while navigating the tensions between growth paradigms and human well-being.
- Analysis of the relationship between economic growth, income, and subjective well-being.
- Evaluation of the "Easterlin paradox" and its implications for modern policy.
- Critical assessment of the neoclassical growth model and alternative economic perspectives.
- Investigation of the feasibility of degrowth strategies and their societal impacts.
- Exploration of the role of the state in balancing sustainability with public happiness.
Excerpt from the Book
2.4 Adaptation effect and hedonic treadmill
The levelling down of SWB mentioned before in the US time series data gives reason to deliberate on adaptation effects. Common sense tells us that the thrill of a novelty wears off, because people become accustomed to the new things or experiences acquired. George Loewenstein framed this phenomena “hedonic treadmill”, for the tendency of humans is to quickly return to a stable, baseline hedonic level despite major positive or negative events, i.e. highs and lows in happiness, or life changes (Clark et al. 2008.,p. 104). The metaphor compares the pursuit of happiness analogous to a person on a treadmill which has to keep working just to stay in the same place (resembling to the red queen game in the story of “Alice in wonderland”). In monetary terms, with income adaptation, individuals get used to a payment such that changes in remuneration have only transient effects (ibid.). Apparently, expectations and desires rise in tandem with more money, which results in no permanent gain in happiness, like it is illustrated in the following.
Summary of Chapters
1. Introduction: Introduces the core question of whether economic growth correlates with happiness and outlines the paper's critical perspective on the growth paradigm.
2. Economic growth and happiness: Explores the Easterlin paradox, social comparison, and the hedonic treadmill to explain why increasing income fails to permanently boost life satisfaction.
3. Alternatives to the neoclassical growth paradigm: Critiques neoclassical economics and discusses the Jevon's paradox, decoupling, and the concept of uneconomic growth as a basis for rethinking traditional models.
4. Degrowth policy and prosperity: Investigates the government's role in implementing degrowth, the feasibility of social change, and the normative foundations of sustainability.
5. Conclusion: Synthesizes the findings, arguing that while the Easterlin paradox highlights the limits of growth, degrowth must be socially accepted rather than imposed to effectively foster human welfare.
Keywords
Easterlin paradox, degrowth, economic growth, subjective well-being, happiness, neoclassical economics, Jevon's paradox, hedonic treadmill, sustainability, decoupling, life satisfaction, policy implementation, social comparison, prosperity, welfare.
Frequently Asked Questions
What is the core issue addressed in this paper?
The paper investigates whether the Easterlin paradox, which shows that economic growth does not always result in greater national happiness, justifies shifting away from growth-oriented policies in developed nations.
What are the primary themes discussed?
Central themes include the relationship between income and well-being, the critique of neoclassical growth models, the psychological effects of wealth adaptation, and the political feasibility of degrowth.
What is the main objective or research question?
The primary research question is whether the Easterlin paradox legitimizes the implementation of degrowth policies to better serve the welfare of citizens in developed nations.
Which scientific approach is utilized?
The work employs a theoretical analysis of economic literature, behavioral psychology, and sustainability studies to assess the systemic properties of modern capitalist economies.
What topics are covered in the main section?
The main sections cover the Easterlin paradox, the "hedonic treadmill," neoclassical growth theories, Jevon’s paradox regarding efficiency, and the role of government in social transition.
Which keywords best characterize this work?
Key terms include the Easterlin paradox, subjective well-being, degrowth, neoclassical economics, sustainability, and life satisfaction.
How does the concept of the "hedonic treadmill" influence the author's argument?
The author uses the "hedonic treadmill" to explain why individuals quickly return to a baseline level of happiness despite income increases, undermining the argument that constant economic growth is necessary for satisfaction.
Why does the author conclude that degrowth shouldn't be simply "imposed"?
The author argues that because democracies are mandated to provide freedom of choice, degrowth must be socially accepted and supported by grass-root movements rather than enforced through paternalistic top-down policies.
How does Jevon's paradox impact the critique of technological progress?
Jevon's paradox highlights that efficiency gains often lead to increased overall resource consumption rather than savings, which challenges the idea that technology alone can solve the growth dilemma.
- Quote paper
- Annette Becker (Author), 2014, Does the Easterlin paradox legitimize the implementation of degrowth policies in developed nations?, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/288346
