User:Ultramarine/sandbox Economics and happiness

The economic policy of nation usually emphasizes the importance of economic growth. The standard measure for this is GDP/capita. The implicit assumption is that a higher GDP/capita will increase average happiness. Indeed, research also shows a strong correlation between GDP/capita and average self-reported happiness for relatively poor nations, those with a GDP/capita below $15,000. However, above this level a higher GDP/capita have little or no effect on average self-reported happiness. In both the United States and Japan GDP/capita and average income have greatly increased since the 1950s but average happiness has not increased. There is even some indirect evidence that happiness has decreased, since clinical depression, alcoholism, and crime have greatly increased. 2% of Americans who reached the age of 35 in 1950s had experienced a clinical depression, today the number is 14%. Suicide has increased in most developed nations. People also report that they trust others less than during earlier decades. On the other hand, life expectancy has continued to slowly increase and more economic resources probably explain some of this increase. Still, the little effect on average happiness has caused some researchers question the current goals and implementation of economic policy in developed nations.

Research indicates that the richest in a nation are happier but as noted above in developed nations an increase in average wealth does not increase happiness. The explanation is probably that happiness is related to expectations and that expectations increase as average income increases. The richer are happier mostly because they note that they have more when they compare themselves to others, not because the higher income in itself increases happiness. The happiness of those with average income does not increase even if average absolute income increases since their relative status compared to others is unchanged.

This had led some researchers to support measures such as high progressive taxation since the happiness of the richest will not decrease very much if their relative income compared to other rich people is unchanged even if their absolute income decreases. On the other hand, such taxation could greatly increase the happiness of those living in abject poverty, for whom fulfillment of basic needs is more important than their relative status compared to other people.

Another suggestion is unhappiness is increased by too high expectations. In particular, today people spend many hours each day watching television and movies. This may have caused people to compare themselves to very beautiful and rich people which may decrease their satisfaction with their own life. The increasing use of relative instead of absolute standards when paying people for work may decrease happiness since there must always be those who fail to achieve expectations when using relative standards.

Since research also indicates more happiness when socializing with friends than at work, another suggestion is that such activities should be encouraged even if this reduces economic growth.