Relative Income, Happiness and Utility: An Explanation for the Easterlin Paradox and Other Puzzles

@article{Clark2007RelativeIH,
  title={Relative Income, Happiness and Utility: An Explanation for the Easterlin Paradox and Other Puzzles},
  author={A. Clark and P. Frijters and M. A. Shields},
  journal={Labor: Human Capital},
  year={2007}
}
The well-known Easterlin paradox points out that average happiness has remained constant over time despite sharp rises in GNP per head. At the same time, a micro literature has typically found positive correlations between individual income and individual measures of subjective well-being. This paper suggests that these two findings are consistent with the presence of relative income terms in the utility function. Income may be evaluated relative to others (social comparison) or to oneself in… Expand
The Easterlin Paradox
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