In 1974, a University of Pennsylvania economics professor named Richard Easterlin published the innocuously titled study, “Does Economic Growth Improve the Human Lot?” (The conventional wisdom at the time being, “Duh.”) In it, he examined 30 surveys conducted in 19 countries, and came up with an unexpected conclusion: while income correlated closely to happiness within countries—richer Nigerians were happier than poorer Nigerians—it wasn’t clear that, on balance, richer countries were any happier than poorer countries. Happiness was purely relative.
The so-called Easterlin Paradox became a cornerstone of “happiness economics” and remains hotly contested. (Critics says its rubbish, and absolute $ = absolute ☺. Easterlin stands by his evidence.) Now, a new study (PDF) from Easterlin and his colleagues at USC builds on the theory. In the case of China, the authors found, a booming economy may be making everyone wealthier—but only a fraction of them are happier because of it.
For the last two decades, China has hewed closely to the old capitalist saw, “A rising tide lifts all boats.” Across demographics and geographies—rich and poor, young and old, urban and rural—economic liberalization has meant higher incomes and standards of living for all Chinese. Per capita consumption has increased four-fold, the authors report, but “life satisfaction” hasn’t risen with it. Instead, a growing wealth gap has created a shadow happiness gap.