ECON 103 Lecture Notes - Lecture 6: Per Capita Income, Easterlin Paradox, Gross Domestic Product

• School: UMASS-Amherst
• Department: Economics
• Course: ECON 103
• Professor: Gerald Friedman

Document Summary

Some assume that having more will make us happier (robinson crusoe) Empirically, evidence is weak, richer countries are not necessarily happier. Social factors shape happiness: more stuff can be a distraction, when others have more, it makes us unhappy. The adam smith problem is back to make an economy as an alternative to war. Happiness may peak at about ,000 of per capita income. Below that, more money makes a big difference for basic needs including life expectancy: above that, something cancels at least some of the benefits of greater affluence. The paradox of happiness: economists expect being richer makes us happier and this is true within countries where the rich are happier but across countries greater income has not led to greater happiness. If we"re dissatisfied, we will be open to suggestion that we need to buy more to be satisfied, and we will work harder, providing more hours of work for our employers.