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By Staff Reporters

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Richard Easterlin PhD, Paradox: For countries with income sufficient to meet basic needs, the reported level of happiness does not correlate with national income per person.

According to colleague Dan Ariely PhD, one explanation is that my happiness depends on a comparison between my income and my perceptions of the average standard of living. If everyone’s income increases, my increased income gives a short boost to my happiness, since I do not realize that the average standard of living has gone up. Some time later, I realize that the average standard of living has also gone up, so the happiness boost produced by my increased income disappears. It is the contradiction between the point-of-time and time series findings that is the root of the paradox: while there is a correlation at a fixed point, there is no trend over multiple points.

That is, in the short run, everyone perceives increases in income to be correlated with happiness and tries to increase their incomes. However, in the long run, this proves to be an illusion, since everyone’s efforts to raise standards of living lead to increasing averages, leaving everyone in the same place in terms of relative income.

Various theories have been advanced to explain the paradox, but the paradox itself is solely an empirical generalization. The existence of the paradox has been strongly disputed by other researchers.

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