This paper will examine the discourse on whether growth leads to greater life satisfaction. First, the historical data on growth and its significance are examined, and then two opposing positions on the question of whether growth brings more happiness are elaborated and analysed. In the end, we will assess to what extent we should and can orient ourselves to these findings in the future.
Growth - Navigator to happiness?
It should always go in one direction: higher, faster, further. We owe much of the technological progress of our time to this mantra. While 36% of Germans owned a smartphone in 2012, the proportion rose to over 81% in 2019. But does it always have to be more money, does the life satisfaction of a society increase when its economy grows?
This debate is certainly not new; almost every pupil should write a paper in social science class on whether the gross domestic product could be a suit-able indicator of prosperity. In recent years, the call for a new indicator of prosperity has become louder and louder. For example, the Prime Minister of New Zealand, Jacinda Ardern, announced last year that in the future she would pay more attention to the standard of living of her citizens than to economic strength alone. She justified the paradigm shift by saying that despite solid growth of 3% and an unemployment rate of 3.9%, New Zealand had a high rate of homelessness and one of the highest suicide rates. Also, 27% of children lived in poverty. Ardern is gradually changing its budget to follow the OECD's "Better Life" recommendations. Priority will now be given to government spending that strengthens mental health, pro-motes digital development and a sustainable economy, and reduces child poverty and inequalities. “This budget is a game-changing event” , says Richard Layard, Professor at the London School of Economics who is an expert on life satisfaction across populations.
The globally prevailing development model in the form of continuous economic growth is also sceptically questioned by some German economists. The president of the German Institute for Economic Research (DIW), Prof. Marcel Fratzscher, also advocates the pursuit of so-called "qualitative growth". The state should try to reduce inequality and promote climate protection through targeted investments.
Table of Contents
1. Growth - Navigator to happiness?
2. What was the relationship between growth and prosperity in the past?
3. Easterlin Paradox
4. Will continuing to grow as before endanger our life satisfaction?
5. Do we need to replace the GDP indicator?
Objectives and Topics
This paper examines the complex relationship between economic growth and subjective well-being, questioning whether the Gross Domestic Product (GDP) remains an appropriate indicator for societal prosperity in the face of modern challenges such as inequality and climate change.
- The historical correlation between economic growth and indicators of social progress.
- Critical analysis of the Easterlin Paradox regarding the long-term relationship between income and happiness.
- Evaluation of research by Stevenson and Wolfers on income and life satisfaction.
- Assessment of the environmental costs of continuous growth and resource consumption.
- Discussion on the necessity of alternative prosperity indicators beyond GDP.
Excerpt from the Book
Easterlin Paradox
Richard Easterlin, Professor of Economics at the University of Southern California, has been investigating the relationship between income and happiness as part of his research since 1974. It became known, in particular, with his article "Does Economic Growth Improve the Human Lot?".
Easterlin’s argues that there is no significant correlation between income and subjective well-being. He posits that a correlation can only be proven in the short term. In the long term, i.e. over more than 10 years, the happiness of an economy would not increase any further. He first proves this thesis with a study conducted by the General Social Survey (GSS). This survey has been asking the American population about their life satisfaction since 1972. Figure 1 shows what proportion of the American population was "very happy" with their life situation. During the 40 years between 1972 and 2014, there was no significant increase in the number of satisfied Americans. Yet GDP tripled during the same period. Consequently, it can be concluded that satisfaction in the USA has not grown along with the growth in economic output. However, it remains questionable whether this finding only applies to the USA or can also be applied to other economies. With the US figures, one could argue that growth could be strongly unevenly distributed so that only the most satisfied Americans benefited from further growth.
Summary of Chapters
Growth - Navigator to happiness?: This chapter introduces the societal obsession with continuous growth and highlights the emerging international debate on moving beyond GDP as the sole measure of prosperity.
What was the relationship between growth and prosperity in the past?: This section explores historical correlations between GDP and social development metrics, such as life expectancy and literacy, while questioning the limits of these gains.
Easterlin Paradox: This chapter analyzes Richard Easterlin's hypothesis that long-term economic growth does not lead to increased societal happiness, contrasted with the critical perspectives of researchers like Stevenson and Wolfers.
Will continuing to grow as before endanger our life satisfaction?: This section discusses the environmental consequences of the global drive for growth, specifically linking resource consumption and CO2 emissions to climate risks that threaten future human well-being.
Do we need to replace the GDP indicator?: This final chapter synthesizes the research to conclude that while GDP measures economic output, it is an insufficient indicator of well-being, necessitating the inclusion of climate and social factors in future metrics.
Keywords
Economic Growth, Subjective Well-being, Easterlin Paradox, GDP, Life Satisfaction, Sustainability, Climate Change, Resource Consumption, Social Progress, Inequality, Prosperity Indicators, Happiness Economics, Market Failure, Overconsumption, Human Development.
Frequently Asked Questions
What is the central focus of this research paper?
The paper fundamentally investigates whether continuous economic growth actually leads to greater life satisfaction and whether GDP is still a reliable navigator for societal happiness.
What are the primary themes discussed in the work?
The central themes include the economics of happiness, the historical relationship between economic output and basic human needs, the Easterlin Paradox, and the tension between economic growth and environmental sustainability.
What is the main research question?
The primary research question is whether there is a significant, long-term correlation between economic growth and increased life satisfaction, and if the current global growth model is still viable.
Which scientific methodologies are employed?
The work utilizes a literature and position analysis, evaluating key studies and data sets from economists like Richard Easterlin, Betsey Stevenson, and Justin Wolfers, as well as environmental data from the World Bank.
What topics are covered in the main section of the paper?
The main section covers the historical data on growth versus social progress, the specific arguments surrounding the Easterlin Paradox, the critique of adaptation theory, and the environmental implications of infinite growth.
Which keywords best characterize this study?
Key terms include Economic Growth, Subjective Well-being, Easterlin Paradox, Happiness Economics, and Sustainability.
How does the author interpret the Easterlin Paradox?
The author explains the paradox through the lens of human adaptability and rising aspirations, noting that while income increases happiness initially, the effect diminishes over time.
What role does the "Better Life" concept play in the discussion?
The paper uses the example of New Zealand's "Well-being Budget" to illustrate a practical policy shift that prioritizes mental health, sustainability, and inequality reduction over mere GDP growth.
How does environmental damage influence the conclusion of the paper?
The paper argues that climate change, driven by industrial growth, poses a direct threat to future habitability and well-being, rendering a pure focus on GDP growth unsustainable.
What is the final verdict on the GDP indicator?
The paper concludes that while GDP remains useful for tracking economic standards of living, it is insufficient on its own and must be supplemented by indicators that account for social and ecological realities.
- Citation du texte
- Hanif Rahimy (Auteur), 2021, Economic Growth and Subjective Well-Being, Munich, GRIN Verlag, https://www.grin.com/document/1022211
