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Growth, Consumption, and Happiness: Modeling the Easterlin Paradox

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  • Mark Stelzner

    (Connecticut College)

Abstract

Since the 1970s, there has been mounting empirical evidence that after a certain point, income and happiness, or life satisfaction, are not correlated. However, despite the growing empirical evidence, the new dynamic has not been adequately modeled mathematically. To remedy this gap, in this paper, we go through the literature on the relationship between consumption, income, and happiness and provide a novel mathematical model. As we will see, our model can explain all of the empirical nuances encountered by happiness studies and also helps understand the relationship between reported life-satisfaction and other variables like inequality.

Suggested Citation

  • Mark Stelzner, 2022. "Growth, Consumption, and Happiness: Modeling the Easterlin Paradox," Journal of Happiness Studies, Springer, vol. 23(2), pages 377-389, February.
    • Handle: RePEc:spr:jhappi:v:23:y:2022:i:2:d:10.1007_s10902-021-00402-4
    DOI: 10.1007/s10902-021-00402-4
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    Cited by:

    1. Xiu Wu & Jinting Zhang & Daojun Zhang, 2021. "Explore Associations between Subjective Well-Being and Eco-Logical Footprints with Fixed Effects Panel Regressions," Land, MDPI, vol. 10(9), pages 1-15, September.

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    More about this item

    Keywords

    Conspicuous consumption; Happiness; Growth; Easterlin paradox;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General

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