QuestionsWhat is happiness?The Easterlin paradox: money makes us happy, but growth does not
What is happiness?A social matter

The Easterlin paradox: money makes us happy, but growth does not

The Easterlin paradox; the happiness-income paradox; social comparison

Richard Easterlin 1926 · 2024Beyond a certain level, getting richer does not make a society happier.
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What it claims

Happiness depends largely on comparison with others and on one's expectations, not only on income. When the country gets richer, expectations rise with it and cancel the expected effect: growth alone does not lastingly improve average happiness.

Why

Rich people are happier than poor ones, but when a whole country gets richer nobody feels higher up: we compare ourselves.

The same idea through history
Karl Marx1849Marx (Wage Labour and Capital): a house, small or large, meets every need as long as the surrounding houses are equally small. If a palace rises beside it, it shrinks into a hut. Easterlin quotes it in 1974 as the starting idea: we judge our home, and our life, against other people's.
Richard Easterlin1974"Does Economic Growth Improve the Human Lot?": from thirty surveys in nineteen countries (1946-1970), Easterlin finds that the rich say they are happier than the poor within each country, but that average happiness does not follow the wealth of countries nor, in the United States, growth. He explains it by comparison with a norm that rises with the standard of living.
Richard Easterlin2010Easterlin and colleagues (Proceedings of the National Academy of Sciences) revisit the question with developing countries, eastern European countries and more rich countries: in the long run (ten years or more), happiness does not rise when a country's income rises. In the short run, happiness and income rise and fall together.
In short

"The Easterlin paradox: money makes us happy, but growth does not" is an argument by Richard Easterlin (Easterlin, "Does Economic Growth Improve the Human Lot?" (1974), 1974) on the question "What is happiness?" (answer: a social matter). Its claim: Happiness depends largely on comparison with others and on one's expectations, not only on income. When the country gets richer, expectations rise with it and cancel the expected effect: growth alone does not lastingly improve average happiness. According to AskPhilosophy's logic check (Z3 solver), the argument is valid only if one grants a premise the author leaves unstated (P3, P4). AskPhilosophy presents 2 objections, 2 of them with a documented reply, and the original text behind each premise, checked word for word.

Easterlin, "Does Economic Growth Improve the Human Lot?" (1974)
Valid with an implicit premise

Within a single country, the rich say they are happier than the poor: no surprise. So we expect that if the whole country gets richer, the whole country will be happier. In 1974, the American economist Richard Easterlin looks at happiness surveys made since 1946 and finds the opposite: in the United States the country gets much richer and average happiness barely moves. His explanation: we do not feel rich in absolute terms, but compared with others and with our expectations. If everyone goes up one floor, no one feels higher. This debate has stayed lively for fifty years.

P1Within a single country, at a given time, the richest say on average that they are happier than the poorest. Easterlin finds this in every survey he gathered.
P2But when a whole country's income rises over the years, average happiness does not rise steadily. In the United States since 1946, higher income was not systematically followed by greater happiness.
P3 · implicit premiseIf happiness depended only on income itself (on what it lets us buy), then a richer country would be, on average, happier.
P4 · implicit premiseThe happiness gap between rich and poor (P1) comes either from income itself or from comparison with others: we judge our situation against a norm drawn from our social experience.
Therefore happiness depends largely on comparison with others and on one's expectations, not only on income. When the country gets richer, expectations rise with it and cancel the expected effect: growth alone does not lastingly improve average happiness.

click a premise to reject it

If you accept every premise, logic forces you to accept the conclusion. So the debate is about the premises.
Checked by a logic solver: the premises cannot all be true while the conclusion is false.
Without the implicit premise: Without P3 and P4, the computer finds a case where the rich are happier in each country, where average happiness does not rise with growth, and where comparison plays no role: for example if happiness depends on income alone, but happiness statistics are badly measured over the years. Easterlin dismisses this by gathering surveys from very different countries, but P3 and P4 are indeed assumptions.
Valid with P3 and P4. P2 and P3 give: income itself does not explain happiness. P4 says the rich-poor gap has a cause, either income alone or comparison. Comparison remains. The debate is about P2 (does average happiness rise with a country's wealth or not, and over what time span?) and P4 (are there no other explanations, such as crude measurement?). The argument does not say money does not matter: it says other people's money matters too.
Analogy. In a cinema, the person standing up sees better than the one sitting. But if everyone stands up, no one sees better, and everyone's legs hurt. For Easterlin, part of the pleasure of being rich is being richer than others, and it disappears when everyone rises.

Objections

2

Each objection is a conversation: click to see who replies and where the debate stands.

Betsey Stevenson and Justin Wolfers 2008 · attacks premise 2

With more recent data and more countries, there is no paradox. Rich countries are on average happier than poor ones, with no point where wealth stops mattering. And over time, when a country grows, its average happiness rises. Individuals and countries follow the same relation: absolute income matters, comparison somewhat less.

Easterlin replies
Easterlin and colleagues Reply by Easterlin et al. (2010)
Critiques claiming that happiness and income rise together over time result either from a statistical artifact or from confusing the short-term relationship with the long-term one.
The debate goes on (our summary) Both camps agree that happiness and income rise together over a few years. They disagree on the long run (ten years or more), and on how to measure. This debate over numbers is not closed.
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Daniel Kahneman and Angus Deaton 2010 · attacks the conclusion

On more than 450,000 responses, they separate two things. When people evaluate their life ("is my life a success?"), satisfaction rises steadily with income. When daily emotions are measured (joy, stress, sadness), they also rise with income, but nothing improves beyond about $75,000 a year. So income weighs on life evaluation by itself, and the ceiling on emotions needs no comparison to be explained.

Easterlin replies
M
Matthew Killingsworth Reply by Killingsworth (2021)
With over one and a half million real-time reports, collected by smartphone from 33,391 employed US adults, he finds no plateau in experienced well-being above $75,000 a year: it keeps rising with the logarithm of income.
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Killingsworth, Kahneman and Mellers Adversarial collaboration (2023)
The three authors reanalyse Killingsworth's data: the plateau exists, but only among the least happy 20 percent of people. Among the happiest, happiness keeps rising with income, even faster. The two studies, they say, can be reconciled.
The debate goes on (our summary) These three studies compare people in the same country at one time. They show that income matters, which P1 already grants. They cannot separate the weight of income itself from that of comparison: that is precisely Easterlin's starting point. They add to the debate rather than settle it.