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The Study of Happiness

The maxim, “Money can’t buy happiness,” was confirmed in a number of studies in economy and psychology. These studies show that despite the increase in the standard of living and wealth in industrialized countries, the level of happiness remains stagnant. In 1974, Professor of Economics at University of Southern California, Richard A. Easterlin, published a groundbreaking study.

The publication, “Does Economic Growth Improve the Human Lot? Some Empirical Evidence,” [39] established what is now known as “The Easterlin Paradox,” a key concept in happiness economics. The paradox asserts that in international comparisons, the average reported level of happiness does not vary much with national income per person, at least for countries with income sufficient to meet basic needs. Easterlin argued that personal happiness does not depend on people’s absolute income, but on their relative one. People are unhappy not because they are poor, but because they are (or perceive themselves to be) at the bottom of a scale by which they measure themselves.

Below is a diagram demonstrating average income compared to happiness in the United States, 1957-2002, released by The World Watch Institute in 2004 [40]:

Easterlin was not the only one who doubted that a successful economy is measured by the growth of the Gross National Product (GNP) and the parameters related to it. In a lecture on TED, Ideas Worth Spreading[41], Nic Marks, founder of the Centre for Well-Being at the New Economics Foundation (NEF), made some very poignant arguments regarding how we measure happiness. “How crazy is that that our measure of progress, our dominant measure of progress in society, is measuring everything except that which makes life worthwhile [well-being]? One of the problems we face ... is that the only people that have cornered the market in terms of progress is a financial definition of what progress is, an economic definition ... that somehow, if we get the right numbers to go up, we're going to be better off, ...that somehow life is going to get better. This is somehow appealing to human greed ... that more is better. Come on. In the Western world, we have enough.”

[39] Richard A. Easterlin, “Does Economic Growth Improve the Human Lot? Some Empirical Evidence,” University of Pennsylvania (1974),

[40] Brian Halweil and Lisa Mastny (project directors), State of the World 2004: A Worldwatch Institute Report on Progress Toward a Sustainable Society, Linda Starke, Editor (N.Y., W.W. Norton & Company, Inc., 2004),, Figure 8-1, p 166

[41] Nic Marks, “The Happy Planet Index,” TED, Ideas Worth Spreading (July 2010),

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