Sunday, December 01, 2013

Economic development can only buy happiness up to a ‘sweet spot’ of $36,000 GDP per person

Other research has found that individual happiness continues to increase with increasing income well above this amount. This is not inconsistent with the article.

http://www.zeitnews.org/social-sciences/society/economic-development-can-only-buy-happiness-sweet-spot-36000-gdp-person

December 1, 2013

Economists have shed light on the vexed question of whether economic development can buy happiness – and it seems that life satisfaction actually dips among people living in the wealthiest countries.

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A new analysis led by economists Eugenio Proto in the Centre for Competitive Advantage in the Global Economy at the University of Warwick and Aldo Rustichini, from University of MInnesota finds that as expected, for the poorest countries life satisfaction rises as a country’s wealth increases as people are able to meet their basic needs.

However, the new surprise finding is that once income reaches a certain level – around $36,000, adjusted for Purchasing Power Parity (PPP) - life satisfaction levels peaks, after which it appears to dip slightly in the very rich countries.

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The researchers find suggestive evidence that this happiness dip in the wealthiest countries is because more money creates higher aspirations, leading to disappointment and a drop in life satisfaction if those aspirations are not met.

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