Would a richer decade have meant a happier one?

a post by Gavin Kelly for the Resolution Foundation blog

Consider the good fortune of a country far richer than the UK. Its economy is over £300bn bigger and its workers are almost a quarter more productive than Britain’s, enjoying wages that are typically £7k higher. Households are flush enough to spend thousands more on consumption, just as public services are far better resourced. This economy still faces deep challenges – including entrenched inequality, regional imbalances and climate change – but prosperity generally makes life just that bit easier.

If this imaginary nation sounds both foreign and familiar, well, it should. It’s a sketch of the economy the UK might have today if it hadn’t just lost a decade of economic progress following the financial crisis.

As a dismal decade draws to a close, it’s worth conjuring up this counterfactual – not to torment ourselves with what might have been, nor to re-litigate the rights and wrongs of economic austerity. Rather, it is a timely moment to ponder how we would feel if things had turned out differently: would richer have meant happier?

This may sound like a fatuous question to many. Walk across any town or city in the UK and the human cost of economic stagnation is clear. Yet the link between national prosperity and personal well-being is complex. One of the most cited  and contested – findings in modern social science, the so-called Easterlin paradox, holds that as nations get richer they tend not to get happier, despite the fact that within a given society those with more money tend to be more satisfied.

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This article originally appeared in the Financial Times.

Labels:
Easterlin_paradox, happiness, well-being, individual_wealth,

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