An Economic Perspective
Lall Ramrattan and Michael Szenberg
Luigino Bruni, Bruni De Rosa and Alessandra Smerilli
The modern approach to the economics of happiness can be reconduced to the impressive work known as the ‘Easterlin paradox’. At the beginning of the seventies the economist Richard Easterlin observed that, even though within each country higher incomes were associated with higher levels of happiness, in a country over time average levels of happiness do not increase as the average income increases. In other words, the very rich are happier than the very poor, but as the country gets richer happiness remains almost constant. The evidence was first proposed in his original work for the US during the period 1946–70 (Easterlin 1974) and then during the period 1972 to 2002 (Easterlin 2005) when the gross domestic product (GDP) in the United States almost doubled while happiness remained constant. In a more recent paper (Easterlin 2015) the author confirmed the validity of the paradox using US data in the period 1972–2014. This evidence suggests that, beyond a certain income level required to meet basic needs, the so-called subsistence level, additional income doesn’t lead to additional happiness. Individual wellbeing is made of a broader set of factors (health, relations, life sense), other than pure income, which need to be accounted for in order to define a worthwhile life. Indeed, it is worth remarking that, in a modern sense, the economics of happiness can no longer be confined to the evaluation of subjective or psychological wellbeing, but also has to encompass the whole intellectual and political movement known as going beyond GDP and its implications in terms of the measurement and analysis of quality of life (QoL).