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Paradox Lost?

42 Pages Posted: 12 Jan 2016  

Richard A. Easterlin

University of Southern California - Department of Economics; IZA Institute of Labor Economics

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Abstract

Or Paradox Regained? The answer is Paradox Regained. New data confirm that for countries worldwide long-term trends in happiness and real GDP per capita are not significantly positively related. The principal reason that Paradox critics reach a different conclusion, aside from problems of data comparability, is that they do not focus on identifying long-term trends in happiness. For some countries their estimated growth rates of happiness and GDP are not trend rates, but those observed in cyclical expansion or contraction. Mixing these short-term with long-term growth rates shifts a happiness-GDP regression from a horizontal to positive slope.

Keywords: Easterlin Paradox, economic growth, income, happiness, life satisfaction, subjective well-being, transition countries, less developed countries, developed countries, long-term, short-term, trends, fluctuations.

JEL Classification: I31, D60, O10, O5

Suggested Citation

Easterlin, Richard A., Paradox Lost?. USC-INET Research Paper No. 16-02. Available at SSRN: https://ssrn.com/abstract=2714062 or http://dx.doi.org/10.2139/ssrn.2714062

Richard A. Easterlin (Contact Author)

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

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