Happiness and Development Explaining the Paradox

SOC 206: The Sociology of Development Final Seminar Paper

Arturo Franco
May 21, 2005 Kennedy School of Government Harvard University

The Sociology of Development Final - Seminar Paper

Arturo Franco

I. Introduction: The Paradox of Happiness and Development

The grumbling rich man may well be less happy than a contented peasant, but he does have a higher standard of living than the peasant. Amartya Sen

Economists and political scientists, as opposed to sociologists and psychologists, have commonly backed away form the use of subjective assessments of human development. In turn, there has been a tendency to focus on the fundamental importance of economic and material growth for reducing poverty and attaining a wide range of other development objectives, including notions of well-being. However, even when most of the modern economic models assume that income and utility move in parallel, some recent studies on life satisfaction or happiness find a seeming paradox that challenges that postulation: aggregate levels of life satisfaction (happiness) do not increase as societies grow wealthier, even though within countries, better-off individuals are, for the most part, happier than the less wealthier ones. These findings highlight the importance of relative rather than absolute differences in income levels, particularly after countries cross a certain economic threshold in their development process. This paradox between growing income and decreasing subjective well-being (SWB) could also show that some factors, outside of material accumulation and economic growth, can affect a persons appraisal of their own welfare, and could also influence their responses to incentives and policies. Faced by these trends, social scientists have begun to ask: why and how does economic development make people increasingly unhappy?

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An interesting way of stating this paradox can be found in Lane (2000, p. 13), who believes that the economic () institutions of our time are products of the utilitarian philosophy of happiness but seem to have guided us to a period of greater unhappiness. Luckily, we have seen a few attempts to study the relationship between happiness and development, which has focused mostly on individual wealth and demographic characteristics such as age, marital status, and education. This paper constitutes a review of the most relevant literature on this topic and its main findings. In the next section, we present a brief overview of some of the evolution of different theoretical approaches to the concept of happiness. In Section III, we focus on some of the main sociological and psychological explanations of the discussed paradox. In Section IV we describe some of the attempts to examine this issue within the field of economics. Later on, in Sections V and VI, we review some of the empirical evidence on the subject, and illustrate some of the issues of measurement of these effects, respectively. In the final section we present some potential public policy implications.

II. From Happiness to Utility: Historical Evolution of the Concept

The happy man will not need external prosperity. - Aristotle

As we can draw from the quote, the Aristotelian conceptualization of happiness was not that of a temporary state that could be achieved, but as a way of living that individuals could subscribe to, regardless of their living environment or societal context. In a sense, this notion does not produce any concerns regarding the effect that economic development could have on of human happiness, given that well-being is unaltered.

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In contrast, there is another view which states that the sources of happiness are material, and that it can be achieved or lost throughout life. The juxtaposition of these two ideas of happiness was discussed along many centuries by some of the worlds most renowned philosophers and thinkers and led to the very ardent eighteenth century debate on virtue, commerce and luxury.1 In this period, along with his economic and philosophical works, Adam Smith (considered the father of economics) developed a normative and objective notion of happiness which Smith defined as real happiness based on a specific model of virtue linked to prudence.2 The presence of Smiths notion of real happiness, led to the elaboration of an objective notion of utility in later works, as can be taken from the following historical analysis by Agnati (2002): Happiness in the social sciences is a concept which allows us to follow the development of the economic doctrines from which, analytically, the logic of production and of employment was derived, with a positive theory. In a chronological succession we find that Muratoris (1749) public happiness is understood as normative public felicity; then we have English utilitarianism, in the sense of the absolute utilitarianism of Bentham (1789); later, with the revolution in economic science of the 1870s, the marginalistic utilitarianism of Jevons (1871), Menger (1871) and Walras (1874) was innovative. The maximum ramification of the neoclassicists was general economic equilibrium in which we have the static wellbeing of Pareto (1896).

Chiara, (2003, p. 11)

Chiara, (2003, p. 3) argues that such notion can be derived from Adam Smiths elaboration of a distinction between value in use and value in exchange developed in the Wealth of Nations.

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Then, in the traditional concept of wellbeing, there is the novelty of organic wellbeing of Demaria (1931) and, reviewing the concept of happiness in the mid-18th century, Kaldors (1939) contemporaneous compensating happiness. Another fruit of the doctrinarian tradition is found in Romagnosi (1832), from which Demaria (1963) draws lincivilimento interpreted as the fifth sub-function of the production function, the other four sub-functions being technical combination, cost, revenue, and investment.3 As we will see, these recent developments of the concept of happiness produce some important issues in its analysis as an important outcome variable of the economic process. Lastly, it is important to note that the concept of human well-being, which is still commonly linked and even understood as happiness, is currently regarded as an irreducible human right by the United Nations Organization (and most countries in the World).

III. Social Theories of Happiness and Development a. Time Pressures and Modernization
Happiness is not best achieved by those who seek it directly. - Bertrand Russell

As part of the Modernization Theory tradition, Parsons (1971) and other sociologists have suggested that the quality of life has been proliferating along with living standards and economic progress, along the modernization path.

Agnati (2002, p. 2)

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It is exactly this change that accelerates and complicated social life, producing some of the negative effects of growing pressure (i.e. stress) and at the same time, seem to be counterbalanced by the returns of modernization, in a pattern of increasing satisfaction with material things. The happiness and development paradox can then be interpreted through the modernization theory structure in an interesting way. In fact, empirical evidence suggests there is a general trend found in many modern societies; time pressure seems to rise and many people spend more time working and there are more complaints about the pace of life.4 The paradoxical question in this sphere becomes then: are happiness and life satisfaction socio-cultural constructions typical of modern societies? Why does industrialization have the tendency to produce goods rather than leisure time? Garhammer (2003) suggests some answers: A first explanation for this paradox is that the advantages which are assigned to modernization i.e. the rising living standard and enhanced opportunities for enjoyment of life are able to compensate the cost of modernization i.e. rising time pressure. A second explanation is that time pressure is good for us since it keeps us going. In this view pace of life generates eu-stress or arousal. In this psychological approach time pressure fulfils a positive function for mobilizing individual resources.5 Finally, the author also suggests a third approach: Even when the majority of citizens report high levels of happiness, the need to ease the time-burden of disadvantaged groups and to down-speed work and social life in general is urgent.

4 5

Garhammer (2003, p. 4) Garhammer (2003, p. 4)

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These results back up the scarcity hypothesis of Inglehart 2000: Individuals as well as societies place the greatest subjective value on those things which are relatively scarce: As disposable time runs short in wealthy nations, time becomes upgraded in the value system.6 In this manner, when more people feel that they are rushed, then the value of time becomes more important and costly. This could be one of the mechanisms through which development produces a decrease in the aggregate levels of happiness.

b. Marx and Time Poverty

Happiness seems made to be shared. - Pierre Corneille

On the same line (but many years before), in his Grundrisse (1857) Karl Marx formulated insights on the significance of time prosperity and economic advancement for enjoyment of life: both an increase in consumer goods and in disposable time to enjoy these goods would be necessary to enhance quality of life.7 Nevertheless, Marx states that this simple proposition is almost impossible to be achieved in a capitalist economy. While private property and the wealth of nations which dedicate their power to the growth of capital are promoted through the use of increasing labor time and human capital, Marx insists that society will not gain wealth in this way: people enhance their wealth through saving working time by increasing the productivity of their work in order to transform their working time into their disposable time, but in market societies

6 7

Inglehart (2000, p. 200) Garhammer (2003, p. 43)

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productivity is permanently increased and does not serve to increase work-free hours and years of the employees.8 In the current economic reality, this assertion can become evident, especially in developing countries. The world economy does not seem to be presenting a scarcity of sources of means of production (i.e. financial capital and natural resources) and there are enough input goods and workers willing to work. The open market system creates a permanent pressure for competitiveness and an increase in productivity, which has resulted in leisure time poverty for many. On the one hand, as stated by Garhammer (2003), millions of workers whose wages no longer serve for their rising expenses, have forced leisure time lacking income and hence deteriorating standards of living. On the other hand, those whose labor is still demanded are afraid of unemployment in the future and they have to be willing to accept cuts in income and living standards and working overtime. Hence the Marxist time yields, which in principle would be possible for enhancing the quality of life of all, are replaced through a division between income-poor and time-poor.9 While both of the mechanisms by which capitalist modes of production (and modernization) produce increasing time pressures that negatively affect life satisfaction and overall happiness, it is not clear whether the socialist alternative can produce better results. According to Murray (1991), people living in capitalist societies are still better able to pursue happiness than are people living under socialism. Despite the inroads made by the welfare state in Western Europe and North America, people in those parts of the
8 9

Garhammer (2003, p. 44) Garhammer (2003, p. 36)

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world continue to have much more control over important functions of their lives than do people living under socialism. I think the merits of the capitalist model are revealed by an examination of the quality of personal and community life in the countries of the West versus the socialist countries.10 On the other hand, the huge accumulation of goods and services, and the adoration of everything that is private (which characterizes market societies) may be reactions to the capitalist corrosion of everything that is common to people. The time pressure and the relational failure of capitalist societies, can explain both the capacity of those societies to generate growth and their failure in the promise of increased happiness.11

c. Psychologists and Set-Point Theory of Happiness

Happiness makes up in height for what it lacks in length. - William Cowper

As reviewed by Easterlin (2005), the growing literature in positive and hedonic psychology has shown a tendency towards the so-called set-point theory in which happiness is primarily determined by personality and genetic factors, and like these factors, is highly stable over the life course. Important life events, such as a major accident or serious disease, loss of a job, the formation or dissolution of unions, birth of a child, and death of a partner, only temporarily deflect a persons happiness from a setpoint given by personality and genetic traits.12 This theory is based on the notions of mechanisms of psychological adaptation and compensation, through which humans
10 11

Murray, (1991, p. 19) Bartolini, (2003, p. 12) 12 Easterlin, (2005, p. 2)

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maintain a steady-state level of life satisfaction equilibrium, deviating from it only temporarily. For our current purposes, set-point theory and psychological adaptation would make the discussion of the effects of development on happiness futile, unless development could affect the exogenous factors that produce the initial (and constant) level of happiness in each individual or society. While adaptation and compensation mechanisms have been evidenced in many studies, the relevant empirical question in this case is: how complete is this adaptation to development effects on overall happiness? According to Di Tella (2001), there is persuasive evidence that a change-in-GDP effect upon a countrys happiness is consistent with theories of adaptation. However, while it seems likely that some of the well-being gains from extra national income wear off over time, there is persuasive evidence of long-lasting gains in happiness derived from economic advancement (at least until society reaches the paradoxical threshold) as we will see in the following section.

IV. Economic Theories of Happiness Following the utilitarian tradition discussed earlier, which has virtually permeated to all corners of economic thought, happiness and subjective well-being have not been a recurrent theme in mainstream research for many decades. However, very recently, some economists have attempted to resolve the widely asserted happiness and development issue. As stated by Bartolini (2003), a man of the nineteenth century would probably be astonished that Western societies emancipated from mass poverty would be populated by

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a mass of dissatisfied individuals; and the billions of human beings who still suffer from poverty would probably find it just as astonishing.13 The happiness and development paradox takes several flavors in the study of economics, and life satisfaction has been related to income, inequality, growth, unemployment and even inflation issues.

a. Personal Income & Inequality

The greatest happiness for the greatest number. - Cesare di Bonesana Beccaria

As we have mentioned before, the basic happiness paradox for economists can be interpreted as the issue of how important is an individuals relative income or consumption for their well-being, when we compare it to its absolute terms. On one extreme, as shown by Alpizar (2005), standard economic theory typically assumes, based on no empirical evidence that only absolute income and consumption matter. On the other side, some economists have concluded that only it is relative income which seems to matter; based on a large number of survey-based psychological studies where it is found that subjective happiness increases with income in a given country and in a given year, but also that average happiness in a given country seems to be roughly constant over time, even though average income increases.14 According to Easterlin (2001), material aspirations are initially fairly similar among income groups (more income brings greater happiness) but as aspirations grow along with income, they undercut this favorable effect. In other words, since aspirations grow along with earnings, experienced happiness is systematically different from
13 14

Bartolini, (2003, p. 7) Alpizar et al (2005, p. 406)

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projected happiness. In the same line, recent studies have shown that reported levels of happiness do not increase along with the level of income in advanced countries (for example, Blanchflower and Oswald, 2000; Easterlin, 1995). If we also acknowledge the existing economic literature of time pressure (similar to the facts discusses in Section III) and the ideas that free time becomes an increasingly scarce good (Sullivan and Gershuny, 2001) the happiness paradox for economics suggests that in reality, individuals (assumed to be rational actors) are behaving in an economically sub-optimal way. In the words of Biswanger (2002), they would be better off if they worked less and if they had more leisure time; therefore the question arises: If different economic behavior would make us happier; why dont we change our behavior? 15 Since the rationality of economic agents cannot be put into question without affecting most of the basic principles of modern economics, the answer to this question has been posed as a debate among preferences between a personal and societal wellbeing. In this sense, and in accordance to the utilitarian creed, the quality of a society should be judged using the degree of happiness of its members, the best society being the one that provides the greatest happiness for the greatest number. However, if one where to follow the egalitarian principle, the quality of a society should be judged by the disparity in happiness among citizens, a society being better if differences in happiness are smaller.

15

Binswanger (2002, p. 2)

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The growing literature on happiness and levels of income disparity shows that countries differ greatly in the degree of inequality that they endure, even at comparable levels of development. For instance, Alesina et al (2004) shows that European observers object to the higher and growing inequality in the US. American commentators argue that European societys obsession with egalitarian principles and equality can suppress creativity and produces a vicious cycle of welfare compulsion for the worse-off in society. The author also finds that individuals in developed countries have a lower tendency to report themselves happy when inequality is high, even after controlling for most personal characteristics; in Europe, the poor and those on the left of the political spectrum are unhappy about inequality; whereas in the US the happiness of the poor and of those on the left is uncorrelated with inequality. Interestingly, in the US, the rich are bothered by inequality.16

b. Growth, Inflation & Unemployment

There is more to life than accelerating growth. M. Gandhi.

Another important and contested issue in economics is the relationship between movements of major macroeconomic variables and aggregate happiness. To begin, there is in the literature some reliable evidence that peoples happiness answers en masse are strongly correlated with movements in current and lagged GDP per capita.17 In this sense, economic growth and increased production can be then associated with a stable increase in opportunities for consumption, savings, and investment, where innovative products are
16 17

Alesina et al (2004) Di Tella et al (2002, p. 823)

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created constantly and society acquires more choices. However, some economists also believe that this consequential element of economic advancement, the increase in the amount of available options for consumption, could turn out to be a mixed blessing as they also raise the opportunity costs of every consumption or investment decision; in other words, the more options exist, the more alternative ways there are to spend (or invest) your money and it gets increasingly difficult to make an optimal decision as our capacity to absorb the relevant information is limited.18 In other words, the dynamic nature of the conditions of decision making that stem out of economic growth processes could produce increasing difficulties for individuals and society to enjoy the growing variety of goods and services because they feel incapable of taking the proper choices and, once a decision has been made, there is a constant feeling of having missed an even better option. The natural consequence of this pattern becomes a growing infeasibility of long-term commitments as we have to keep the options open for the future (i.e. life-long employment, life-long marriage, life-long living in the same city), which could constitute another explanation of the paradoxical decrease in overall happiness.19 In terms of other macroeconomic phenomena, Di Tella et al (2001) studied reported well-being data on a quarter of a million people across 12 European countries and the United States, and shows that people appear to be happier when inflation and unemployment are low (while at the margin, unemployment depresses reported wellbeing more than does inflation).
18 19

Binswanger (2002, p. 13) Binswanger (2002, p. 13)

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V. Comparative Happiness: Some Illustrations

It is an empirical truth that there are sizeable differences in happiness between countries. These differences are consistent across indicators and quite stable through time. There is a little support for the view that these differences are due to cultural bias, or that they results from cultural differences in language, desirability bias, response tendencies or familiarity with the concept of happiness.20 At the same time, there is concrete empirical sustain for the view that these disparities result from the fact that some societies provide their citizens with better living conditions than others; and in this way, the bulk of the variance in happiness can be explained by nation characteristics such as economic prosperity, social security, political freedom, and social equality.21 However, we can also find marked differences in overall happiness trends and patterns between countries (and groups of countries) in unequal stages of development.

a. Happiness in the United States and Europe

People who claim that money cant buy happiness just dont know where to shop. - Anonymous

Many studies have asked the question: are Americans (or Europeans) getting happier over time? In the early 1970s, 34% of those interviewed in the General Social Survey described themselves as very happy, while only 25 years later, the figure was
20 21

Ouweneel and Veenhoven (1991, p. 20) Ouweneel and Veenhoven (1991, p. 20)

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30%. For women, the numbers go from 36% at the start of the period, to 29% a quarter of a century later. On the other hand, in the early 1970s approximately a third of British people say they are very satisfied with life. The number is unchanged by the late 1990s. How much of this shift has to do with economic performance? Di Tella (2002) has also studied the effects of economic downturns and recessions on happiness (subjective well-being) in the U.S. and Britain, which are usually large. He correctly states that it is not just that income (or production) drops and that some people are unemployed, but on top of those costs to society, and after controlling for personal characteristics of the respondents, year dummies, and country fixed effects, we estimate that individuals would need 200 extra dollars of annual income to compensate for a typical U.S.-size recession. The compensation amount might seem ridiculously low to a normal person, however, it constitutes almost 3% of per capita GDP, a loss that is over and above the actual fall in income in a recession. A potential interpretation that the authors present for this phenomenon is that in an economic downturn, people suffer what they call a fear-of unemployment effect, one of the many psychic costs of recessions which standard economics tends to ignore. While Easterlin (1995) argued that economic growth does not bring happiness to a society, a proposition that has also been empirically supported for the U.S. and most of Europe, the picture is not a simple one. Blanchflower and Oswald (2000) found that some groups in society (including American men and blacks) have become happier through the last three decades. Moreover, once the British equations control for enough personal

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characteristics (including whether unemployed or divorced), there is some evidence of a statistically significant upward movement in well-being since the 1970s. Their other main findings are the following:

Table 1: Some Interesting Results (US and Britain, 1970-1995)

1. Whatever the consequences of anti female-discrimination policy elsewhere in society, it has apparently not been successful in either country in creating a feeling of rising wellbeing among women. 2. Black people in the US appear to be much less happy, ceteris paribus, than whites. One interpretation of this is that our methods provide a new way to document the existence of discrimination. 3. The difference in the well-being of racial groups in the United States has narrowed over the last few decades. Blacks have made up ground. 4. Our calculations suggest that to compensate men for unemployment would take a rise in income at the mean of $60,000 per annum and to compensate for being black would take $30,000 extra per annum. A lasting marriage is worth $100,000 per annum (when compared to being widowed or separated). Because there appears to be little precedent for such calculations in the published social science literature, they should be treated with care. 5. Higher income is associated with higher happiness. 6. Relative income matters per se. 7. Reported well-being is greatest among women, married people, the highly educated, and those whose parents did not divorce. It is low among the unemployed. Second marriages are less happy. 8. Happiness and life satisfaction are U-shaped in age. In both Britain and the US, wellbeing reaches a minimum, other things held constant, around the age of 40.
Source: Conclusions by Blanchflower, D.G. and Oswald, A.J. (2000)

b. Happiness in the Developing World

Happiness is often the result of being too busy to be miserable. - Anonymous

Moving to the other side of the spectrum, Peiro (2001) examines the relationships between socioeconomic conditions and happiness or satisfaction of individuals in 15

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developing countries. In agreement with earlier studies, age, health and marital status are strongly associated with happiness and satisfaction. In seeming contrast with other studies, however, unemployment does not appear to be correlated with happiness, although it is clearly associated with satisfaction. Income is also strongly associated with satisfaction, but its association with happiness is weaker. These results point to happiness and satisfaction as two distinct spheres of well-being. While the first would be relatively independent of economic factors, the second would be strongly dependent.22 In another assessment, Graham and Pettinato (2000) found that the determinants of happiness in Russia were very similar to those for Latin America (See: Appendix). Not surprisingly, increases in wealth have a positive effect on happiness, which, as in the case of Latin America, seem to outweigh the effects of education level. However, in contrast to Latin America (and more so to the advanced industrial countries), being married did not have any significant effects on happiness in Russia. Men, meanwhile, were happier than women in Russia, in contrast to Latin America, where there was no gender effect. Fear of losing ones job had significant and negative effects, while being employed had no significant effects in either direction.23 Finally, figures 1 and 2 in the Appendix show some empirical constructions of the happiness life-cycle for Latin America and the United States. Rather surprisingly, the two graphs show almost a perfect negative relationship, where 45 years of age is roughly the happiest age level for Americans and the lowest point in happiness for LatinAmericans. The possible reasons behind this are not clear and add to the confusion.
22 23

Peiro (2001, p. 23) Graham and Pettinato (2000)

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VI. Measurement and Indicators of Happiness

Happiness is not always measured in smiles. - Anonymous

a. Appraisal of Happiness Veenhoven (1996) states that the life satisfaction of humans can be inferred from their appraisals, this is, the fact that humans experience affects. These affective appraisals are highly indicative for the quality-of-life (QOL). In this regard, positive affects are generally indicative of good adaptation to life, and in many ways, to cognitive notions of happiness. In the same authors words, the degree to which inhabitants of a nation appraise their life positively can be assessed in two different ways: indirectly by inferring from their behaviors and directly by asking how they feel about their life. For long social scientists have preferred the former method. By now it is clear that only the latter is viable for this purpose. Assessing the appraisal of life in a nation requires that the total of experienced well-being is estimated. This sum of experience can properly be denoted by the concept of happiness; where for this particular construction, happiness is a person's overall evaluation of his/her life as-a-whole.

b. Happy Life-Expectancy and Development Indicators The concept of happiness can also be implemented as a viable option for measuring overall development of human well-being among nations. Currently, the most widely used indicator for compounded measures of well-being or QOL is the Human Development Index. In this approach QOL is measured by input; the extent to which a

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society can offer conditions assumed to be favorable; yet, the basic problem is that one never knows to what extent the cherished provisions are really good for people.24 An alternative, presented by Veenhoven (1996) is measuring QOL in nations by output, and to consider how well people actually flourish in the country, a conception which is operationalized by combining registration based estimates of length-of-life, with survey data on subjective appreciation-of-life. In this way, measures of life-expectancy in years are multiplied by average happiness on a 0-1 scale. The product is named Happy LifeExpectancy (HLE), and can be interpreted as the number of years the average citizen in a country lives happily at a certain time.25 Recently, the HLE indicator was assessed in 48 nations, with results that show it is highest in North-West European nations (about 60) and lowest in Africa (below 35). Compatible with our previous discussion, HLE scores are systematically higher in nations that are most affluent, free, equal, educated, and harmonious; country-characteristics that together explain 70% of the statistical variance in HLE. Strikingly, HLE is not significantly correlated to unemployment, state welfare and income equality, nor to religiousness and trust in institutions; HLE does not differ either with military dominance and population pressure.26

VII. Policy Implications

Happiness is a choice that requires effort at times. Aeschylus

24 25

Veenhoven (1996, p. 11) Veenhoven (1996, p. 22) 26 Veenhoven (1996, p. 16)

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To end, we briefly turn to one of the practical applications of the discussion about how the process development impacts peoples happiness levels, the sphere of public action and decision-making. One of the most fundamental objectives of public policy is to improve the welfare of as many people as possible; acting within a given set of resource limitations. Still, most academic and public policy debates rarely address the question of what determines improvements in welfare or in life satisfaction, and in a way, the issue of happiness is virtually inexistent. In this context, we believe that the question of whether economic growth increases happiness and what public policies increase happiness should constitute and important theme and be addressed fully. Easterlin (2005) believes that with regard to public policy, the present results imply that the high degree of stability in average happiness over the life cycle is by no means inevitable; rather, that public programs focused on specific domains may alter the life course of happiness. By showing that satisfaction with health is the most consistently negative influence on happiness throughout the life cycle, the author states it is reasonable to infer from the evidence that public programs that modified the incidence with age of disease and disability, and reduce the breakup of families due to early death, would finally improve the life cycle pattern of satisfaction with family life, which would raise the life course trajectory of happiness.27 Lastly, Bartolini (2003) also believes that government programs and policies can increase happiness, but this is reached along the arduous road and long-drawn-out time scale of cultural policy (for example educational policy) and a shift in individuals perceptions and expectations.

27

Easterlin (2005, p. 25)

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VIII. References
Agnati, A. (2002) Happiness as Productivity: The development of the concept of happiness in political economy from the mid-18th to the late 20th centuries. Working Paper for Conference: The Paradoxes of Happiness in Economics. University of Milano-Bicocca. Alesina, A., Di Tella, R., MacCulloch, R. (2004) Inequality and Happiness: Are Europeans and Americans different? Journal of Public Economics. Vol. 88, 2009-2042. Alpizar, F., Carlsson, F. and Johansson-Stenman, O. (2005) How Much do we Care about Absolute versus Relative Income and Consumption. Journal of Economic Behavior & Organization. Vol. 56, 405-421. Bartolini, S. (2003) Why do People Feel the Pressure of Time? Why are they so Unhappy? Working Paper for Conference: The Paradoxes of Happiness in Economics. University of Milano-Bicocca. Binswanger, M. (2002) Why Does Growth Fail to Make Us Happier? Working Paper. University of Applied Sciences of Northwestern Switzerland, Gallen. Blanchflower, D.G. and Oswald, A.J. (2000) Well-Being Over Time in Britain and the USA. NBER Working Paper No. 7487. Chiara, B. (2003) The Road to Virtue: Adam Smiths Economics of Happiness. Working Paper for Conference: The Paradoxes of Happiness in Economics. University of Milano-Bicocca. Di Tella, R., MacChulloch, R.J., Oswald, A.J. (2001) Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness. The American Economic Review. Vol. 91, No. 1, 335-341. Di Tella, R., MacChulloch, R.J., Oswald, A.J. (2002) The Macroeconomics of Happiness. The Review of Economics and Statistics. Vol. 62. Easterlin, R. (2001) Income and Happiness: Towards a Unified Theory. The Economic Journal. Vol. 111, 465-484. Easterlin, R.A. (1995) Will Raising the Incomes of All Increase the Happiness of All. Journal of Economic Behavior and Organization, 27, 35-47. Easterlin, R.A. (2005) Is There an Iron Law of Happiness. Department of Economics, University of Southern California. Garhammer, M. (2003) Pace of Life and Enjoyment of Life. Working Paper for Conference: The Paradoxes of Happiness in Economics. University of Milano-Bicocca. Graham, C., and Pettinato, S. (2000) Happiness, Markets, and Democracy: Latin America in Comparative Perspective. Center on Social and Economic Dynamics. Working Paper No. 13. Inglehart, R. (2000) Globalization and Postmodern Values. Washington Quarterly, Winter, pp. 215-228. Kenny, C. (1999) Does Growth Cause Happiness, or Does Happiness Cause Growth? Kyklos. Vol. 51, Fase 1, 3-26.

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Lane R. (2000) The loss of happiness in market democracies. Yale Univ. Press, New Haven and London. Marx, K.: 1970 (1857) Grundrisse der Kritik der Politischen konomie, Frankfurt am Main: EVA. Murray, C. (1991) The Pursuit of Happiness under Socialism and Capitalism. Cato Journal, Vol. 11, 2. Ouweneel, P. and Veenhoven, R. (1991) Cross-National Differences in Happiness. Published in: Bleichrodt, N & Drenth, P.J. (eds) Contemporary issues in cross-cultural psychology, Swets & Zeitlinger. Amsterdam, The Netherlands, pp 168-184 Peiro, A. (2001) Happiness, Satisfaction and Socioeconomic Conditions: Some International Evidence. University of Valencia, Spain. Sullivan, O. and Gershuny, J. (2001) Cross-national Changes in Time-use: some Sociological Histories Re-examined. British Journal of Sociology, 52, 331-347. Veenhoven, R. (1996) Happy Life-Expectancy: A Comprehensive Measure of Quality-of-Life in Nations. Social Indicators Research. Vol. 39, 1-58.

IX. Appendix

Source: Graham, C., and Pettinato, S. (2000)

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Fig.1 Life Cycle Happiness

2.4

2.3

Mean Happy

2.2

2.1

2.0 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88

Age

Source: Easterlin (2005)

Fig. 2 Latin American Happiness Averages

Source: Graham, C., and Pettinato, S. (2000)

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The Sociology of Development Final - Seminar Paper

Arturo Franco

Source: Kenny (1999)

Source: Blanchflower and Oswald (2000)

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The Sociology of Development Final - Seminar Paper

Arturo Franco

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The Sociology of Development Final - Seminar Paper

Arturo Franco

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