Does economic wealth lead to well-being

Does Economic Wealth Lead To Well-being? In 1974, USC Professor Easterlin put forward that within a country the rich have higher average subjective well-being (SWB) than the poor. Nevertheless, the average SWB is uncorrelated with income between rich countries and poor countries. For example, the Gallup poll of 2012 well-being from Livescience website (2011) shows that Panama has 61% of people who said they are thriving, which had a greater score than the USA. The modern economy based on the opinion that the growth in the economy can lead to SWB increases.

Surprisingly, economic growth does not bring morehappiness. Therefore, this is the Easterlin Paradox. One explanation is ignoring variables, in the first part of this essay, noneconomic factors such ashealth, environmentorfamilywill be discussed, and these factors will counteract the positives of wealth. Then the second part will account for why economic wealth cannot measure happiness. There is also a certain amount of opinion to support economic wealth give rise to happiness. It will be presented by discussing GDP issues in part three.

Well-being does not only depend on economic factors, but it also be influenced by work, environment, health or family relations etc. The Weighted Index of Social Progress sees Sweden, Denmark and Norway on top, while the Happy Planet Index sees Colombia and Costa Rica among the leaders (Measures of Well-being, 2006). And a few South American countries’ SWB is as high as developed countries such as Puerto Rico, or Guatemala. The above cases show that economy is one of the elements in estimating SWB. It is evidence that economic wealth results in the working burden raising dramatically.

Working pressure disrupts the staff’s life balance and thousands of work makes staff feel anxious every day. As the economy grows rapidly, the environment is polluted heavily. It is evident that the quality of environment decreasing gives rise to individuals’ SWB fall. Another contributing factor is health which is regarded as the most important aspect by the majority of people. Better health conditions give people confidence as well as well-being. Sometimes, individuals are entangled with family issues, and the negative effects from family cancel out the positive effects from economic income.

If a government considers increasing SWB, it should make more in policies that promote good governance, liberties, democracy, trust and public safety (WhyMoneyDoesn’t Buy Happiness, 2011). Personal satisfaction lies in diverse factors, and earning does not play a major role. Section 2 will be devoted to the two explanations why GDP cannot measure the real SWB, especially in developed countries. A United Nations reported that the UK is only the 18th happiest place to live (British people are more miserable than Costa Ricans and Israelis, UN finds, 2012). Firstly, take case of a rabbit eats carrot.

A rabbit finds a room filled with a large quantity of carrots while the rabbit is going to starve to dying. Apparently the rabbit will gobble down the carrots, but the carrots will be become less attractive when the rabbit is almost full. According to the story, in rich countries the SWB rises up to a particular point, but it will never go beyond point. That is the reason why advanced countries (for example, USA, UK, France and Germany) SWB was not ranked in the top position. In reality, money is the carrot. The meaning of 100 dollars is significantly dissimilar between beggars and billionaires.

When economy develops to a certain extent, economic factors cannot measure happiness because there are several variables to act on the SWB simultaneously. An amount of factors were introduced at the last paragraph. The second explanation is more psychological. The major determinant of SWB is the relative life condition (comparing with people in the same level) rather than the real life condition. Being more specific, if one individual has better living condition than the other people who live in the same area, the one is more satisfied. This psychological comparison is called keep up with the Joneses.

For this reason, the SWB will not change even if economic growth brings about rising incomes. For instance, on the one hand, country people live in the countryside and local residents lead the similar country life. On the other hand, people who live in urban areas lead completely diverse lives. Their social circles usually have a great number of affluent individuals, so the psychological pressure which is caused by the wealth comparison is greater than the happiness of high income. There are also positive views to support economic growth leads to SWB.

To be empirical, countries with a lower GDP typically have more problems. Taking an example of Africa, according to the graph of geography of happiness from the Economist website (2010), countries at the bottom (mostly African) had lower score (The rich, the poor and Bulgaria, 2010). Most areas of Africa are rural. Africans now distinctly desire a better life. Although rich countries are clearly happier, the correlation is not perfect (The rich, the poor and Bulgaria, 2010). In the research of assistant professor Stevenson, they take a 0 to 10 life satisfaction scale to survey the work.

People who live in the rich countries place themselves around 7 and 8. At the same time, people in the poor countries consider themselves at about 3. As the matter of fact, increasing GDP can raise average satisfaction. For instance, nations with booming GDP imply government can spend more capital on health care, educationor environmental protection. It is not apparent that a lager GDP measures citizen’s health, education or intelligence directly, but it does continue to contribute to citizen’s life. This paragraph provides a summary and a discussion of some extensions of this paper.

Firstly, basic needs are meet differences in well-being are less frequently due to income, and more frequently due to factors such as social relationships and enjoyment at work (Why money doesn’t buy happiness, 2007), different variables influence SWB jointly. Secondly, two explanations were presented to interpret that GDP cannot measure the real SWB. The saturating point exists in the process of economic development promotes SWB, and then the economic factors will not be crucial. What is more, the psychological comparison is a vital determinant in SWB, though the income rising expressively brings plentiful happiness.

Thirdly, GDP can increase national SWB authentically. To individuals, large income raises SWB in the short term. There are a number of separable components of SWB (Diener, 2000). Thus, money does not buy happiness. SWB is difficult to be calculated and can be measured in different ways. Happiness, as the ultimate goal, requires the most encompassing measure (measuring of well-being, 2006). Bibliography 1. Deutsche Bank Research, 2006, Measures of Well-being. Available from http://www. dbresearch. com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000202587. PDF [Accessed 19 April 2012] 2.

Dinener, E. 2000. Subjective Well-being: TheScienceof Happiness and Proposal for a National Index. American Psychologist, vol. 55, No. 1, 34-43. 3. Livesciene, 2011, Top 19 Happiest Countries (and the 20 saddest). Available from http://www. livescience. com/13790-19-happiest-countries-20-saddest. html [Accessed 16 April 2012] 4. The Daily Beast, 2007, Why Money Doesn’t Buy Happiness. Available from http://www. thedailybeast. com/newsweek/2007/10/14/why-money-doesn-t-buy-happiness. html [Accessed 19 April 2012] 5. The Economist, 2010, Comparing Countries. The rich, the poor and Bulgaria.

Money really can buy you happiness. Available from http://www. economist. com/node/17722557. html [Accessed 26 April 2012] 6. The Telegraph, 2012, British people are more miserable than Costa Ricans and Israelis, UN finds. Available from http://www. thetelegraph. co. uk/lifestyle/9184916/British-people-are-more-miserable-than-Costa-Ricans-and-Isrealis-UN-finds. html [Accessed 4 May 2012] 7. Yale School of management, What Are the Economics of Happiness? Available from http://bpp. wharton. upenn. edu/betseys/press%20reaction/Easterlin%20Paradox/YaleSOMInterview. pdf [Accessed 26 April 2012]