It's often said that money doesn't buy happiness. This saying appeals to our concerns about the "crass materialism" of modern society. And it is sometimes used as an argument against measuring progress in strict economic terms like "per capita gross domestic product". There's even something in economics called "the Easterlin paradox" that is often cited to back it up. This paradox cites that, measured at a national level, happiness does not seem to rise once certain basic needs are met. In other words, "more is not necessarily better."
On a personal level, I don't think money necessarily equates to happiness. One also has to consider issues of personal values and self-satisfaction - psychic income if you will. But is it true on a national scale?
A recent article in The New York Times (HT to Greg Mankiw) points to some new research that, if it doesn't disprove the Easterlin paradox, at least raises new questions. The article looks at a paper by a couple of economists at the University of Pennsylvania that raises some interesting issues. Their study seems to show a possible link between economic well-being and happiness. But the paper also raises questions in my mind: how do you measure happiness? On a national scale? How time sensitive is the survey? (This last is important because questions of self-satisfaction and well-being can often be answered in widely different ways, depending upon mood and recent experience.) I will need to read the paper to answer the questions. Nevertheless, the graphic in the NY Times article seems to offer some basis for discussion. At the same time, we need to be aware of an issue raised here before: coincidence, correlation or causation?
We often talk to our students about the importance and value of economic development. Does the Easterlin paradox mean we should only worry about improving people's lot up to certain point? Or is there value in promoting economic development across the board? I think this article has "interesting classroom discussion" written all over it. What do you think and what do your students think?