Delving into the tangled layers of happiness, the role of income emerges as a captivating element. However, the correlation between increased income and elevated happiness is not a straightforward ascent, as suggested by the Easterlin Paradox. Coined by Richard Easterlin in 1974, this paradox posits that, while happiness varies directly with income at a point in time, the long-term growth rates of happiness and income are not significantly linked. Social comparison dynamics play a pivotal role; initially, rising income brings happiness through comparisons, but as societal incomes elevate, the relative effect diminishes.
The Aspiration Level Theory suggests that increasing income prompts elevated aspirations, creating a cycle of diminishing satisfaction. Empirical studies in Australia between 2001-2005 showcased that while real income increased, happiness remained constant or slightly declined, emphasizing the impact of peer group income on happiness. However, the Easterlin paradox faces criticism for lacking statistically significant connections between happiness and economic growth over time.
Intriguingly, South Korea's economic growth from 1980 to 2015 displayed a positive correlation between rising average happiness and real GDP per capita, challenging the paradox. This ongoing debate underscores the complexity of the happiness-income relationship, urging careful statistical analysis and a nuanced understanding of the intricate interplay between economic factors and well-being.
Arthashastra 