Welcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: Will faster economic growth make us happier? The relevance of the Easterlin Paradox to Progress Studies, published by MichaelPlant on June 24, 2022 on The Effective Altruism Forum.
This is a transcript of a talk I gave at the Moral Foundations of Progress Studies workshop at the University of Texas in March 2022. Or rather, it’s a re-recorded and edited version of the talk that was subsequently produced for a Global Priorities Institute reading group on ‘progress’ and then updated in light of many helpful comments from that seminar. The original slide deck can be viewed here.
1. Introduction
As I understand it, Progress Studies is a nascent intellectual field which starts by asking the question, “Since we seem to have gotten a lot of progress over the last couple of hundred years, where did this come from, and what can we do to get more of it?” (Vox, 2021).
Progress Studies has been popularised by academics such as Tyler Cowen and Steven Pinker. However, the Easterlin Paradox presents a real challenge to the claim that if we want more progress, we just need to improve the long-run growth rate - a view that Cowen argues for in his book Stubborn Attachments. This is a possible version of Progress Studies and the one I'm responding to.
So what is the Easterlin Paradox? Quoting Easterlin and O'Connor (2022), the Easterlin Paradox states:
At a point in time, happiness varies directly with income both among and within nations, but over time the long-term growth rates of happiness and income are not significantly related.
There is a common view that economic growth is going to make our lives better, but the Easterlin Paradox challenges this.
What's paradoxical is that at a given point in time, richer people are more satisfied than poorer people and richer countries are more satisfied than poorer countries, but over the course of time, countries which grow faster don't seem to get happier faster. In other words, if I get richer, that will be good for me, but if we all get richer, that won’t do anything for us collectively.
While subjective wellbeing (self-reported happiness and life satisfaction) has gone up in previous decades, the challenge of the Easterlin Paradox is that countries which grow faster do not seem to be getting happier faster; growth per se seems unrelated to average subjective wellbeing. If the paradox holds, the result would be striking and significant. It would suggest that, if we want to increase average wellbeing, we must not rely on growth, but go back to the drawing board and see what really works.
There's been quite a bit of debate over the nature and existence of the Paradox. The topic first emerged in 1974 when Richard Easterlin published a paper called, Does Economic Growth Improve the Human Lot? It's been particularly challenged by Stevenson and Wolfers (2008), who claim the paradox is an illusion and growth is making us happier. However, after looking into this myself, I actually think that Easterlin has the better half of the debate and the paradox does propose a real challenge to the idea that economic growth alone will make us happier.
My main purpose here is to explain what the Easterlin Paradox is and why - despite doubts - we need to take it seriously. My second purpose is to show that we can work out how to improve subjective wellbeing in society and make some tentative suggestions about this. However, this project is only starting to be taken seriously and there is lots more work to be done.
2. Evidence for the Paradox
So where does the Easterlin Paradox data come from? It's based on survey questions such as:
Taking all things together, how would you say things are these days?
Would you say you're very happy, pretty happy, or not too happy?[1]
All things considered, how satisfied are you with your life as a whole nowadays, from one, diss...