A closer look at the Easterlin Paradox

This paper argues that increasing average incomes and stagnating levels of happiness, as observed in the United States since the 1970s, do not constitute a paradox. First, we show that the effect of higher incomes has been more than counteracted by changes in other socioeconomic variables, notably the prevalence of marriage and divorce. Second, we show that the effect of a given amount of real income on happiness has not changed between the 1970s and the early 2000s.

Research highlights▶ The paper presents empirical evidence refuting the Easterlin Paradox. ▶ The stagnating average happiness observed in the US can be accounted by changes in factors other than income. ▶ Econometric analysis shows that the happiness effect of a given level of real income has not been falling over time.