Higher incomes may make life easier with an ability to afford certain items whether it be a new car or household appliance but this is only one variable in predicting happiness. Other variables, such as social support, life expectancy, freedom, generosity, and the absence of corruption, also help explain varying levels of happiness between countries. The Easterlin Paradox In the mid 1970s Richard Easterlin drew attention to studies that showed that, although successive generations are usually more affluent that their parents or grandparents, people seemed to be no happier with their lives. It is an interesting paradox to study when you are writing about measuring economic welfare and the standard of living.
The World Happiness Report for 2023 advocated policies that not only foster economic growth but enhance the quality of life. Governments can adopt a more holistic approach to policy-making, ensuring that progress is measured not solely by material wealth but by the well-being of their citizens. While higher GDP per capita goes together with higher life satisfaction, there are other factors that help explain the striking differences between some examples – see image below from the IMF.
Source: F&D March 2024 – IMF
Sign up to elearneconomics for comprehensive key notes with coloured illustrations, flash cards, written answers and multiple-choice tests on GDP and its limitations that provides for users with different learning styles working at their own pace (anywhere at any time).
ECONFIX 