Scitovsky and the income-happiness paradox

The recent debate on happiness in economics has revived interest in Scitovsky's 1976 book The Joyless Economy, which aims at extending the concept of welfare, and explaining the income-happiness paradox, i.e. “why [American] unprecedented and fast-growing prosperity had left its beneficiaries unsatisfied.” A dynamic economic model will distil Scitovsky's proposal, which has not yet been integrated into conventional economics. It will show that people's dissatisfaction may be due to their excess of demand for ‘comfort’, which essentially requires consumption goods, and to their failure to adequately develop ‘leisure skill’, which is necessary to enjoy ‘creative activities’ during leisure time. Since comfort includes comparing consumption with that of others, Scitovsky also strengthened the conventional solution of the paradox.

► The analysis of Scitovsky's book The Joyless Economy is formalized. ► The concept of well-being is extended to psychological concepts. ► A new explanation of the income-happiness paradox emerges. ► Existing explanations are also strengthened. ► Well-being implies unceasing learning, and escaping from addiction and habit.