Abstract: In this article I address how the Easterlin Paradox impacts Progress Studies and questions about how we measure success in Progress Studies. No matter what one thinks about it, we can do more to increase the ability for people to select products that increase happiness. I then give 3 necessary traits (variety in products, ability to correctly select, and how one interprets products) for optimum money-to-happiness translation. I then give feedback on how to improve this and potential biases in the Progress Movement.


The easterlin paradox states that at a given moment in time, self reported happiness will correlate with income, but across time (that is increasing happiness for everyone) it doesn't. Oftentimes, the lack of change over time is explained by people chasing the hedonic treadmill and the correlation at a given time is envy (or more positively, thankfulness?).


Some objections to the argument is that people have higher expectations over time and adjust their scores upward such that the average stays the same. To paraphrase Tyler Cowen's argument in Stubborn Attachments, another one is the intuitive argument that even if our neighbor has a Ferrari, you are still better off objectively with a sedan that breaks down less than if both of you and your neighbor had cars (of the same envy difference) from 50 years ago that broke down more frequently. Also, the life expectancy correlates with income (between countries), which means that you have more positive life to live (assuming that added time is on average net positive). 

Log scale income (x-axis) vs. Life expectancy (y-axis)


Oftentimes, people falsely conclude from Easterlin's Paradox that all spending will never improve happiness. This wouldn't follow from the correlational evidence. All it states is that there is currently a  relationship between income and happiness between citizens in a country at a point in time, and a lack of relationship over time.  No matter how big of a factor you believe Easterlin's Paradox to be, it is still worth thinking about how people turn dollars into happiness. Assuming we are not at the maximum of the spectrum, we still have improvements to make in changing dollars into happiness. I propose 3 necessary traits I think would impact the dollar-to-happiness transfer: (1) variety in products in offered by the long term happiness and (2) ability for a person the select those given products, and (3) How one interprets their products. That is, there needs to be possibility for products to improve happiness, for people to select them and use them appropriately for their happiness. 


Stated formally, (ideal money happiness connection) implies the 3 traits above. Or, by the contrapositive, the lack of one of these traits  implies not an optimal happiness-money connection. Note: the contrapositive follows by demorgan's law; that is, NOT (1 and 2 and 3) = (not 1) or (not 2) or (Not 3).


I go into more detail below:


  1. The variety of products is necessary for increased happiness.  Note: This assumes a happiness difference between different products. This is typically known in the progress studies area, but like the economic-happiness connection, hasn't been specified to the level it needs to.  For example, if you personally find alot of meaning by learning,  having a greater number of books (or other learning materials) available allows you to chose the ones you prefer the most.  If people find meaning through their family/partner,  there can be fun traditions ( board games, the movies, restaurants, or the greater number of options of entertainment/food in the future) which can increase bonding between each other.  If people find purpose through work, they can select there are more options of occupation for better personality-occupation fit.
  2. One needs the ability to select the products that increase happiness to do so. In economic theory, homo economicus is often assumed as a simplifying assumption, but it often isn't true. In real life, oftentimes sellers optimize for what gets them immediate sales rather than the long term benefit of the product. This includes manipulating psychology in sales and increasing the immediate pleasure of products. Fast food, alcohol, smoking, social media, and gambling are all immediate pleasurable benefits that the companies benefit from, but don't incur the long term cost. Entertainment that may be happiness increasing in small amounts may be net happiness decreasing in large quantities (think social media and youtube). Consumers need to be more long term rational for their dollars to turn into happiness. 
  3. One needs to interpret the products in the proper way to increase happiness. This section isn't about physically using the products successfully, but rather about the mind of the person behind it while they are using it. While most people in the progress movement don't emphasize the difference between pleasure and fulfillment, it is very important to differentiate the 2 when trying to measure human happiness. Note: I take happiness as the sum of pleasure and fulfillment with different weights. I think this is also what  most people think of as happiness when surveyed. In the modern US, religious affiliation has decreased, the want for family has decreased, the excellent/good mental health has decreased 14% since 2012, and loneliness has increased since the pandemic. From the examples in (1), the shared joy of experiences (ex. entertainment/restaurants in (1)) with others is decreased if you don't have anyone to do it with, and interest in work/hobbies(ex. work/reading in (1)) will decrease with worse mental health(ex. depression).  If one lacks a purpose in life (something religion typically filled),  then they will have the belief that anything they do (whether interaction with products or otherwise) will have any importance (whether for any self enjoyment or help for others). Pleasure can fill the void of meaninglessness and prevent people from getting help.  A quote from Viktor Frankl, a psychiatrist and the author of Man's Search for Meaning,  states, "When a person can't find a deep sense of meaning, they distract themselves with pleasure." Even if people have access to the products and can select them successfully for long term happiness, individuals with worse mental health, less human connection, and less purpose will enjoy them less.


How can we improve these? If you want GDP per capita to have a better relationship to happiness, please consider acting on these. Going into each trait 

  1. If consumers start to choose better for their own happiness (trait 2), then companies will adopt to do so in a competitive marketplace. This could mean healthier foods, healthier social media, less common psychology manipulation sales tactics, and lower levels of drug use/gambling. Oftentimes, traditionally better products will correlate with higher happiness (ex. healthcare, transportation, etc.), so I'm not advocating for a total rehaul of the economy. Economic externalities need to be taken care of, although this can come from boycotts, it is mostly done through public awareness or regulation (which can often be overdone, but is necessary in moderation for negative externalities). The exact levels will depend on the typical political/cultural forces in a society.
  2. Encouraging a stronger level of self-discipline  and awareness during product purchasing towards will help people select the best option for them long term. Note: This is thinking rationally, but then actually implementing it in real life. Often times, progress studies people are libertarian (either politically or have similar personality traits), and feel annoyed at other people getting involved in their business and don't feel the need to get involved in the business of others. Maintaining a culture of helping one another  (such as warning them about potential harm they are doing to themselves) will help keep people happier and healthier, whether that is connected to consuming products or not.
  3. Emphasizing meaning, understanding the downsides of loneliness, preventing mental health issues, and maybe having kids.  Some people can be overbearing when it comes to people's personal decision(see libertarian comment above), but one can encourage these things for the average person (especially children/teens), but accept that everyone will make their own decisions. Progress studies people seem to be lower in the moral foundation of purity. If you want to convince to others, being able to talk to people higher in purity (such as myself) or at least are average, I would recommend reading "The Righteous Mind" by Jonathan Haidt. 


Thanks for reading! I might post more about formalizing ways to get better. Criticism is appreciated.


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