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When Does Economic Growth Improve Well-Being?

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The Economics of Happiness

Abstract

Is economic growth the way to pursue better lives? After the second world war, many industrialized countries experienced an unprecedented economic growth that significantly improved people’s living conditions. However, the raising wealth did not result in higher well-being. This conclusion is inconsistent with the well established belief that economic growth is the way to improve the human lot. In this chapter I discuss the evidence on some of the conditions for durable improvements in well-being, namely promoting social capital, and reducing income inequality. I conclude that the quality of growth matters for well-being and that it is possible to adopt policies to make economic growth and well-being compatible.

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Notes

  1. 1.

    Subjective well-being is usually observed thanks to questions asking the respondents to state how happy or satisfied with their lives they are. For example, subjective well-being, sometimes also referred to as “happiness” or “life satisfaction”, is usually observed through answers to survey questions such as: “Taking all things together, how happy would you say you are?” or “All things considered, how satisfied are you with your life as a whole these days?” (Van Praag et al. 2003). These measures proved to be reliable sources of information about individual’s well-being and, in the last decades, have been employed in many fields of applied social research. The reliability of these measures has been corroborated by experimental evidence from several disciplines. For example, subjective well-being correlates with objective measures of well-being such as heart rate, blood pressure, frequency of Duchenne smiles, and neurological tests of brain activity (Blanchflower and Oswald 2004; Van Reekum et al. 2007). Moreover, subjective measures of well-being are strongly correlated with other proxies of subjective well-being (Schwarz and Strack 1999; Wanous and Hudy 2001; Schimmack et al. 2010) and with the judgments about the respondent’s happiness provided by friends, relatives or clinical experts (Schneider and Schimmack 2009; Kahneman and Krueger 2006; Layard 2005).

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Acknowledgements

This article reflects the view of the author and does not engage in any way STATEC Research, ANEC and funding partners. The author gratefully acknowledges the support of the Observatoire de la Compétitivité, Ministère de l’Economie, DG Compétitivité, Luxembourg and STATEC. The author wishes to thank Stefano Bartolini, Andrew Clark, Joshua K. Dubrow, Malgorzata Mikucka, Kelsey O’Connor, Chiara Peroni, and the participants to the “Economics of Happiness” conference in honor of prof. Richard Easterlin (Los Angeles, April 6 2018) and to the “International Conference on Policies for Happiness and Health” (Siena, March 19–21 2018). Possible errors or omissions are entirely the responsibility of the author.

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  1. Institut National de la Statistique et des Etudes Economiques du Grand-Duché du Luxembourg (STATEC), Luxembourg City, Luxembourg

    Francesco Sarracino

  2. LCSR National Research University Higher School of Economics, Moscow, Russia

    Francesco Sarracino

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  1. Francesco Sarracino
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Correspondence to Francesco Sarracino .

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  1. FLACSO-México & UPAEP, Tlalpan, Ciudad de México, Mexico

    Mariano Rojas

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Sarracino, F. (2019). When Does Economic Growth Improve Well-Being?. In: Rojas, M. (eds) The Economics of Happiness. Springer, Cham. https://doi.org/10.1007/978-3-030-15835-4_15

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