Does getting a year-end bonus or raise make you happier? Does the lift it gives you tend to quickly fade, especially if others around you also won out in the annual compensation sweepstakes?
If the answer is that a boost in income doesn’t greatly improve your sense of well-being, then you are a proof point of the Easterlin paradox, the economic theory that more money, over the long run, won’t buy more happiness.
The paradox was put forth by Richard A. Easterlin, an economist, a demographer and a seminal figure in the field of academic research into happiness. The University of Southern California, where he was an emeritus professor, called him the “father of happiness economics” in announcing his death.
Mr. Easterlin died at 98 on Dec. 16 at his home in Pasadena, Calif.
Mr. Easterlin’s work challenged both conventional wisdom and a core economic tenet: that economic growth in a society leads to a general improvement in feelings of well-being.
Economists, policymakers and ordinary citizens had long taken it as a given that increasing a nation’s gross domestic product — its total economic output — improves its people’s happiness.
But in the 1970s, Mr. Easterlin, then at the University of Pennsylvania, published research showing that even though incomes in the United States had risen dramatically since World War II, Americans said in surveys that they were no happier.
He found similar results for Japan, which had become one of the world’s wealthiest nations after rebuilding from wartime devastation. Even though Japanese incomes jumped fivefold from 1958 to 1987, Japanese people said that they, too, were no happier.
Mr. Easterlin identified what came to be called the Easterlin paradox in a 1974 paper, “Does Economic Growth Improve the Human Lot?”
Examining opinion polls from 19 countries, he found that affluent people were happier than poor people. But as incomes rose, people’s happiness did not rise commensurately.
When it comes to money, Mr. Easterlin observed, people’s happiness depends on how well off they are compared with those around them. As individuals grow richer, if their friends, co-workers or neighbors also grow richer, they may not feel that they’ve gained anything, only that they’re keeping up with the Joneses.
“Even though I’m happier because my income is higher, I’m less happy because everyone else is going up too,” he explained in an interview in 2021 recorded by the University of Southern California. “So the result is, because of social comparison, people fail to enjoy improvement in income as a source of happiness.”
Mr. Easterlin’s paradox has been cited thousands of times by other scholars, and it has crossed over into popular usage — confirmation to anti-materialists and skeptics of growth at any cost that, as the cliché has it, money doesn’t buy happiness.
Most radically, some economists have said the paradox implied that policymakers shouldn’t seek to raise G.D.P., because it would make little difference to people’s sense of well-being.
In 2008, the paradox was attacked by a couple of rising young economists, Justin Wolfers and Betsey Stevenson, who argued in a paper that a broader body of opinion polls conducted in the 34 years since Mr. Easterlin first published his thesis undermined his conclusions. They found evidence suggesting that economic growth in countries was indeed associated with rising happiness.
Daniel Kahneman, a Princeton psychologist and a Nobel laureate in economics, told The New York Times that year, “There is just a vast amount of accumulating evidence that the Easterlin paradox may not exist.”
Mr. Easterlin responded that even though he agreed that people in richer countries reported being more satisfied with their lives than people in poor countries, he was skeptical that wealth explained their happiness. He called the work by Mr. Wolfers and Ms. Stevenson “a very rough draft without sufficient evidence.”
“Everybody wants to show the Easterlin paradox doesn’t hold up,” he added. “And I’m perfectly willing to believe it doesn’t hold up. But I’d like to see an informed analysis that shows that.”
In 2009, when Mr. Easterlin was awarded the IZA Prize in Labor Economics from the Institute for the Study of Labor, in Bonn, Germany, Mr. Wolfers wrote in a blog entry for the podcast “Freakonomics” that he and Mr. Easterlin “disagree on a pretty important issue,” but he went on to credit Mr. Easterlin as the father of economic analysis of happiness.
“His research has been the inspiration for much of my own interest in the economics of happiness,” Mr. Wolfers wrote.
Richard Ainley Easterlin was born on Jan. 12, 1926, in Ridgefield Park, N.J., to John and Helen (Booth) Easterlin. His father became a commissioner of Broward County, Fla.
Richard earned a master’s degree in engineering from the Stevens Institute of Technology, in Hoboken, N.J., in 1945, but then switched his field to economics. He earned a master’s in economics in 1949 and a Ph.D. in 1953, both from the University of Pennsylvania. He remained at Penn teaching economics for more than 30 years, including three stints as chair of the economics department.
In 1982, he moved west to teach economics at U.S.C., where he became university professor at the Dornsife College of Letters, Arts and Sciences. He was awarded emeritus status in 2018.
Besides his work on economics and happiness, Mr. Easterlin analyzed demographic trends. He proposed the Easterlin effect, which holds that baby booms and baby busts occur for economic reasons.
When jobs are plentiful, he wrote, couples marry young and the country’s fertility rate rises; when jobs are scarce, marriage is delayed and fertility falls. In his view, the 1946-65 baby boom occurred because there were ample job openings, an improvement in incomes and a rise in confidence among couples to start families. The opposite factors converged in the baby bust of the late 1960s and ’70s, he said.
Mr. Easterlin is survived by his wife, Eileen Crimmins, a professor of gerontology at U.S.C. whom he married in 1980; his children, John, Nancy, Susan, Andrew, Matthew and Molly Easterlin; and eight grandchildren. He was previously married to Jacqueline Miller.
Although Mr. Easterlin long believed that no public policies would increase the sum of human happiness, he changed his mind in the 1990s, recognizing that factors other than income were important to a sense of well-being.
“Improvements in income have relatively little effect on happiness,” he said in the 2021 U.S.C. interview, when he was in his mid-90s, “whereas improvements in health and family life have substantial impact.”