Economics serving society

The Great Happiness Moderation

Andrew Clark, Claudia Senik and Sarah Flèche

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The Easterlin paradox plays a central role in research into “the economics of happiness”: the percentage of individuals who declare themselves to be very happy is the same at the beginning of a period of growth as it is at the end – hence the mystery of growth without an increase in happiness. But what do we know of changes in the inequalities of happiness over time?
In this article, Clark, Senik and Flèche measure the spread of happiness, using the biggest international study available as well as long-term national studies (conducted in the US, the UK, Germany and Australia). They discovered that the spread of levels of happiness as declared by the citizens of a country systematically decreases over the course of periods of growth and tempt to equalize itself in contrary to periods of recession. The happiness of inhabitants equalises during periods of sustained growth, and not during periods of recession. Logically, at any given moment, the spread of happiness is weaker in rich countries than in poorer countries. In the first, fewer people declare themselves either very unhappy or extremely happy. How should these results be interpreted? In developed countries, modern growth is accompanied by a greater abundance of public goods, in both general and specific senses: that is, in the fields of education, health, infrastructure and social protection, but also in individuals rights and freedoms, transparency, political pluralism, gender equality and the like. Sources of well-being, these are accessible to all without restriction or exclusion based on price, even if, in fact, their benefits are shared to differing degrees. Thus, of consumption in the broad sense, the common portion increases to the detriment of the portion that is strictly private. Since well-being depends on consumption, it is quite logical that it becomes more and more homogeneous as the public sphere is extended. Why do people choose the extremes on the happiness scale less and less often as the country they live in becomes richer? At the low end of the scale, growth and the welfare state bring more individuals out of poverty and thereby reduce the number of those who declare themselves to be “very unhappy” or “totally unsatisfied” with their lives. At the high end, lifestyles become more homogeneous, so “excess” and thus the satisfaction enjoyed by the highest social strata diminishes; at the same time, the process of growth feeds the aspirations of the most advantaged, who see the frontiers of the possible recede before them, especially as they compare themselves with elites all around the world. Clark, Senik and Flèche also show that the growth of inequalities works against the equalising of happiness: it is weaker in the most unequal countries (in Latin America, for example) than in the more equal countries (of continental Europe). Moreover, in Germany and the United States, the process of the equalisation of happiness came to a halt at the end of the 1990s, due to the rise in income inequalities. The authors conclude that this “boosted Easterlin paradox” is good news because inequality in well-being is synonymous with risk for the members of a society. From behind John Rawls’ “veil of ignorance”, who would not choose to be born into a society in which happiness were equally rather than highly unequally distributed? This discovery mitigates the negative aspect of the initial paradox, thus bringing a note of hope for developing countries for which growth is still to come.
Original title of the article : “The Great Happiness Moderation”
Published in : Happiness and Economic Growth: Lessons from Developing Countries, 2014 - Oxford University Press
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