Richard A. Easterlin

Does Economic Growth Improve the Human Lot? Some Empirical Evidence

Publisher Summary This chapter discusses the association of income and happiness. The basic data consist of statements by individuals on their subjective happiness, as reported in thirty surveys from 1946 through 1970, covering nineteen countries, including eleven in Asia, Africa, and Latin America. Within countries, there is a noticeable positive association between income and happiness—in every single survey, those in the highest status group were happier, on the average, than those in the lowest status group. However, whether any such positive association exists among countries at a given time is uncertain. Certainly, the happiness differences between rich and poor countries that one might expect on the basis of the within-country differences by economic status are not borne out by the international data. Similarly, in the one national time series studied, for the United States since 1946, higher income was not systematically accompanied by greater happiness. As for why national comparisons among countries and over time show an association between income and happiness that is so much weaker than, if not inconsistent with, that shown by within-country comparisons, a Duesenberry-type model, involving relative status considerations as an important determinant of happiness, is suggested.

Will raising the incomes of all increase the happiness of all

Today, as in the past, within a country at a given time those with higher incomes are, on average, happier. However, raising the incomes of all does not increase the happiness of all. This is because the material norms on which judgments of well-being are based increase in the same proportion as the actual income of the society. These conclusions are suggested by data on reported happiness, material norms, and income collected in surveys in a number of countries over the past half century.

INCOME AND HAPPINESS: TOWARDS A UNIFIED THEORY*

Material aspirations are initially fairly similar among income groups; consequently more income brings greater happiness. Over the life cycle, however, aspirations grow along with income, and undercut the favourable effect of income growth on happiness, although the cross-sectional happiness-income difference persists. People think they were less happy in the past and will be happier in the future, because they project current aspirations to be the same throughout the life cycle, while income grows. But since aspirations actually grow along with income, experienced happiness is systematically different from projected happiness. Consequently, choices turn out to be based on false expectations.

An economic framework for fertility analysis.

The standard formulation of the microeconomic theory of fertility, which emphasizes the demand for children and, to a lesser extent, the costs of fertility control, is too limited in its scope for use by most demographers and sociologists. The approach advanced in this paper adds to the usual theory a more explicit and formal treatment of the production of children, including the possibility of shifts in production independent of demand conditions. This more comprehensive framework is compared with the usual approach in the analysis of several empirical problems-non-marital fertility, premodern fertility fluctuations and differentials, and the secular fertility decline-and is shown to be better suited for incorporating the concepts and hypotheses of noneconomists along with those of economists.

The happiness-income paradox revisited.

The striking thing about the happiness–income paradox is that over the long-term —usually a period of 10 y or more—happiness does not increase as a countrys income rises. Heretofore the evidence for this was limited to developed countries. This article presents evidence that the long term nil relationship between happiness and income holds also for a number of developing countries, the eastern European countries transitioning from socialism to capitalism, and an even wider sample of developed countries than previously studied. It also finds that in the short-term in all three groups of countries, happiness and income go together, i.e., happiness tends to fall in economic contractions and rise in expansions. Recent critiques of the paradox, claiming the time series relationship between happiness and income is positive, are the result either of a statistical artifact or a confusion of the short-term relationship with the long-term one.

Why Isn't the Whole World Developed?

The worldwide spread of modern economic growth has depended chiefly on the diffusion of a body of knowledge concerning new production techniques. The acquisition and application of this knowledge by different countries has been governed largely by whether their populations have acquired traits and motivations associated with formal schooling. To judge from the historical experience of the worlds twenty-five largest nations, the establishment and expansion of formal schooling has depended in large part on political conditions and ideological influences. The limited spread of modern economic growth before World War II has thus been due, at bottom, to important political and ideological differences throughout the world that affected the timing of the establishment and expansion of mass schooling. Since World War II there has been growing uniformity among the nations of the world, modern education systems have been established almost everywhere, and the spread of modern economic growth has noticeably accelerated.

What will 1984 be like? Socioeconomic implications of recent twists in age structure

Since 1940, under conditions of restricted immigration and high and sustained growth in aggregate demand, shifts in the relative number of younger versus older adults have had a pervasive impact on American life. Before 1960, younger males were in increasingly short supply and their relative economic position substantially improved; after 1960, the opposite was true. Since the early sixties, as the relative condition of young adults has deteriorated, marriage has been increasingly deferred and fertility reduced. The labor force participation of young women has risen at above average rates, and that of older women has risen at below average rates. Changes in the age structure of the working age population have also contributed to a combination of rising unemployment and accelerating inflation. Cohort divorce rates, suicide among young males, crime rates, and political alienation have worsened. The rise in college enrollment rates has been interrupted, and SAT scores have declined. In contrast, in the period 1940–1960, changes in these various magnitudes were typically of a more favorable sort. The United States is now at the start of a new period of growing scarcity of young adults as a result of the birth rate decline that set in after 1960. This implies that the 1980s will see a turnaround or amelioration in a wide variety of these social, political, and economic conditions, some of which have been taken as symptomatic of a hardening social malaise.

The Fertility Revolution: A Supply-Demand Analysis

Easterlin and Crimmins present and test a supply-demand theory of fertility determination that integrates both economic and sociologic approaches. According to this theory a couples use of fertility control varies directly with the excess of their supply of children over demand (motivation for family planning) and inversely with the perceived costs (both objective and subjective) of regulating fertility. This model is tested with household data from Sri Lanka and Colombia aggregative population data from Taiwan and the Indian state of Karnataka and macro data from 10 Indian states. In all data sets examined motivation for fertility control was consistently and significantly related to use of control. Changes in the supply of and demand for children that increase motivation appear to be most important in generating family planning adoption whereas changes in regulation costs appear less significant. Interestingly supply is as important as demand and perhaps more so. This approach to the fertility transition asserts that with the onset of modernization the number of children that would result from unregulated fertility comes to exceed desired family size and incentives to limit family size develop. The growing excess of the potential supply of children over demand appears to be due to increases in parents potential supply in turn due both to declining infant and child mortality and increasing natural fertility. Once use of fertility control has spread to 50% of married women 35-44 years of age a fertility decline can be expected. By raising the supply of children and lowering demand socioeconomic modernization is both increasing motivation for fertility control and lowering the costs of fertility regulation. The data suggest that family planning programs should be formulated with careful attention to the populations state of motivation and perceived costs of regulation. Early in the modernization process before motivation for family planning has emerged socioeconomic development programs should be prioritized. The targeting of populations for a family planning effort should be based on their motivation not their actual fertility levels and methods that are perceived as entailing low regulation costs should be promoted.

China’s life satisfaction, 1990–2010

Despite its unprecedented growth in output per capita in the last two decades, China has essentially followed the life satisfaction trajectory of the central and eastern European transition countries—a U-shaped swing and a nil or declining trend. There is no evidence of an increase in life satisfaction of the magnitude that might have been expected to result from the fourfold improvement in the level of per capita consumption that has occurred. As in the European countries, in China the trend and U-shaped pattern appear to be related to a pronounced rise in unemployment followed by a mild decline, and an accompanying dissolution of the social safety net along with growing income inequality. The burden of worsening life satisfaction in China has fallen chiefly on the lowest socioeconomic groups. An initially highly egalitarian distribution of life satisfaction has been replaced by an increasingly unequal one, with decreasing life satisfaction in persons in the bottom third of the income distribution and increasing life satisfaction in those in the top third.

Population Change and Farm Settlement in the Northern United States

As farm settlement spread westward, area after area exhibited remarkably similar economic and demographic changes, among them, the establishment of a virtually zero growth rate of farm population. At bottom this was due to a shift in farm family fertility from very high to replacement levels, a trend apparent in older areas as early as the beginning of the nineteenth century despite the abundance of good farm land to the west. The principal source of this wholly voluntary adjustment of fertility was the increasing difficulty encountered by farm parents in providing for their children the kind of start in life they would like them to have. Similar pressures may account for other rural fertility declines in the historical past or todays LDCs.