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Sunday, 6 April 2008

Who says money can't buy happiness?

April 6, 2008, The Sunday Times
Who says money can't buy happiness?

New York - Money might not buy you love, but it now seems that it might be able to buy you happiness - at least according to two Wharton economists, who say that richer countries are happier than poorer ones and that as countries get richer their inhabitants become happier. Their finding challenges the conventional wisdom of the past three decades, according to which higher national gross domestic product often does not translate into a greater overall sense of well-being, the Financial Times said in a report.

This established view is known as the Easterlin Paradox. It is based on a paper done by economist Richard Easterlin in 1974 and has inspired some calls for governments to shift their focus away from increasing GDP.

Now, however, Wharton business school economists Betsey Stevenson and Justin Wolfers argue in a paper that the Easterlin Paradox is not true.
Based on their analysis of data spanning more than half a century and 132 countries, Prof Stevenson and Prof Wolfers contend that if a country is richer, its people tend to be happier, the Financial Times reported.

Prof Wolfers said that he and Prof Stevenson had reached their dissenting conclusion partly owing to improved international statistics covering more countries - poor as well as rich - and a greater number of happiness surveys which had been conducted over the past three decades. The paper will be discussed this week at the spring economic conference of the Brookings Institution, the Washington DC-based think-tank, and is likely to provoke lively debate.

The newspaper said Prof Easterlin had seen a draft of the paper and said he believed that, as far as he was concerned, his paradox still stood. While commending his younger critics on their 'serious research', he said they needed to focus more on what was happening within specific countries, rather than 'throwing all of these countries together'.

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