Adaptation and the Easterlin Paradox

Part of the Creative Economy book series (CRE)


The Easterlin paradox has captured a great deal of attention across social science. The fundamental question behind this paradox is whether income is associated with subjective well-being, where the latter is often measured by single-item questions on happiness or life satisfaction. The broad consensus that has been reached is that, within country, richer people are on average happier than poorer people, and that richer countries are on general happier than poorer countries. As such, the cross-section relationship between income and subjective well-being is positive.


Life Satisfaction Full Adaptation British Household Panel Survey Income Rise Easterlin Paradox 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.



I am grateful to Paul Frijters, Rich Lucas, Ewen McKinnon, Robert Rudolf, Aki Tsuchiya and seminar participants at the Comparative Study of Happiness Conferences in Kyoto and Paris for useful comments.


  1. Anusic, I., Yap, S., & Lucas, R. (2014). Testing set-point theory in a Swiss national sample: Reaction and adaptation to major life events. Social Indicators Research, 119, 1265–1288.CrossRefGoogle Scholar
  2. Apouey, B., & Clark, A. E. (2015). Winning big but feeling no better? The effect of lottery prizes on physical and mental health. Health Economics, 24, 516–538.CrossRefGoogle Scholar
  3. Barazzetta, M. (2014). Adaptation to treatment. Evidence from a RCT in Uganda. University of Nottingham, mimeo.Google Scholar
  4. Bartolini, S., Bilancini, E., & Sarracino, F. (2013). Predicting the trend of well-being in Germany: How much do comparisons, adaptation and sociability matter? Social Indicators Research, 114, 169–191.CrossRefGoogle Scholar
  5. Blekesaune, M. (2008). Partnership transitions and mental distress: Investigating temporal order. Journal of Marriage and Family, 70, 879–890.CrossRefGoogle Scholar
  6. Brickman, P., Coates, D., & Janoff-Bulman, R. (1978). Lottery winners and accident victims: Is happiness relative? Journal of Personality and Social Psychology, 36, 917–927.CrossRefGoogle Scholar
  7. Burchardt, T. (2005). Are one man’s rags another man’s riches? Identifying adaptive preferences using panel data. Social Indicators Research, 74, 57–102.CrossRefGoogle Scholar
  8. Burchell, B. (2011). A temporal comparison of the effects of unemployment and job insecurity on wellbeing. Sociological Research Online, 16, Article 9.Google Scholar
  9. Clark, A. E. (1999). Are wages habit-forming? Evidence from micro data. Journal of Economic Behavior and Organization, 39, 179–200.CrossRefGoogle Scholar
  10. Clark, A. E. (2015). SWB as a measure of individual well-being? In M. Adler & M. Fleurbaey (Eds.), Oxford handbook of well-being and public policy. Oxford: Oxford University Press.Google Scholar
  11. Clark, A. E., & Georgellis, Y. (2013). Back to baseline in Britain: Adaptation in the BHPS. Economica, 80, 496–512.CrossRefGoogle Scholar
  12. Clark, A. E., & Oswald, A. J. (1994). Unhappiness and unemployment. Economic Journal, 104, 648–659.CrossRefGoogle Scholar
  13. Clark, A. E., & Senik, C. (2010). Who compares to whom? The anatomy of income comparisons in Europe. Economic Journal, 120, 573–594.CrossRefGoogle Scholar
  14. Clark, A. E., & Uglanova, E. (2012). Adaptation in the East: Does context matter? PSE, mimeo.Google Scholar
  15. Clark, A. E., Diener, E., Georgellis, Y., & Lucas, R. (2008a). Lags and leads in life satisfaction: A test of the baseline hypothesis. Economic Journal, 118, F222–F243.CrossRefGoogle Scholar
  16. Clark, A. E., Frijters, P., & Shields, M. (2008b). Relative income, happiness and utility: An explanation for the Easterlin paradox and other puzzles. Journal of Economic Literature, 46, 95–144.CrossRefGoogle Scholar
  17. Clark, A. E., Flèche, S., & Senik, C. (2014). The great happiness moderation. In A. E. Clark & C. Senik (Eds.), Happiness and economic growth: Lessons from developing countries. Oxford: Oxford University Press.CrossRefGoogle Scholar
  18. Clark, A. E., D’Ambrosio, C., & Ghislandi, S. (2015). Adaptation to poverty in long-run panel data. Review of Economics and Statistics (forthcoming).Google Scholar
  19. Cole, R., Shakespeare, V., Shakespeare, P., & Hobby, J. (1994). Measuring outcome in low-priority plastic surgery patients using quality of life indices. British Journal of Plastic Surgery, 47, 117–121.CrossRefGoogle Scholar
  20. Di Tella, R., MacCulloch, R. J., & Oswald, A. J. (2003). The macroeconomics of happiness. Review of Economics and Statistics, 85, 809–827.CrossRefGoogle Scholar
  21. Di Tella, R., Haisken-De New, J., & MacCulloch, R. (2010). Happiness adaptation to income and to status in an individual panel. Journal of Economic Behavior & Organization, 76, 834–852.CrossRefGoogle Scholar
  22. Dyrdal, G., & Lucas, R. (2013). Reaction and adaptation to the birth of a child: A couple-level analysis. Developmental Psychology, 49, 749–761.CrossRefGoogle Scholar
  23. Easterlin, R. A. (1995). Will raising the incomes of all increase the happiness of all? Journal of Economic Behavior and Organization, 27, 35–47.CrossRefGoogle Scholar
  24. Etilé, F., Frijters, P., Johnston, D., & Shields, M. (2014). Mental health resilience: which childhood circumstances matter? Paris School of Economics, mimeo.Google Scholar
  25. Flèche, S. (2014). Local autonomy and residents’ wellbeing: Evidence from Swiss reforms. PSE, mimeo.Google Scholar
  26. Frank, R. H., & Hutchens, R. M. (1993). Wages, seniority, and the demand for rising consumption profiles. Journal of Economic Behavior and Organization, 21, 251–276.CrossRefGoogle Scholar
  27. Frijters, P., Johnston, D., & Shields, M. (2011). Happiness dynamics with quarterly life event data. Scandinavian Journal of Economics, 113, 190–211.CrossRefGoogle Scholar
  28. Gardner, J., & Oswald, A. J. (2007). Money and mental wellbeing: A longitudinal study of medium-sized lottery wins. Journal of Health Economics, 26, 49–60.CrossRefGoogle Scholar
  29. Graham, C., Higuera, L., & Lora, E. (2011). Which health conditions cause the most unhappiness? Health Economics, 20, 1431–1447.CrossRefGoogle Scholar
  30. Grund, C., & Sliwka, D. (2007). Reference-dependent preferences and the impact of wage increases on job satisfaction: Theory and evidence. Journal of Institutional and Theoretical Economics, 163, 313–335.CrossRefGoogle Scholar
  31. Hanglberger, D., & Merz, J. (2011). Are self-employed really happier than employees? An approach modelling adaptation and anticipation effects to self-employment and general job changes. IZA Discussion Paper 5629.Google Scholar
  32. Hotz, V. J., Kydland, F. E., & Sedlacek, G. L. (1988). Intertemporal preferences and labor supply. Econometrica, 56, 335–360.CrossRefGoogle Scholar
  33. Inglehart, R., & Rabier, J. R. (1986). Aspirations adapt to situations – but why are the Belgians so much happier than the French? A cross-cultural analysis of the subjective quality of life. In F. M. Andrews (Ed.), Research on the quality of life. Ann Arbor: Institute for Social Research University of Michigan.Google Scholar
  34. Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47, 263–291.CrossRefGoogle Scholar
  35. Laporte, A., & Windmeijer, F. (2005). Estimation of panel data models with binary indicators when treatment effects are not constant over time. Economics Letters, 88, 389–396.CrossRefGoogle Scholar
  36. Layard, R. (2005). Happiness: Lessons from a new science. London: Penguin.Google Scholar
  37. Loewenstein, G., & Sicherman, N. (1991). Do workers prefer increasing wage profiles? Journal of Labor Economics, 9, 67–84.CrossRefGoogle Scholar
  38. Lucas, R. (2007). Long-term disability is associated with lasting changes in subjective well being: Evidence from two nationally representative longitudinal studies. Journal of Personality and Social Psychology, 92, 717–730.CrossRefGoogle Scholar
  39. Lucas, R., Clark, A. E., Georgellis, Y., & Diener, E. (2003). Re-examining adaptation and the setpoint model of happiness: Reaction to changes in marital status. Journal of Personality and Social Psychology, 84, 527–539.CrossRefGoogle Scholar
  40. Lucas, R., Clark, A. E., Georgellis, Y., & Diener, E. (2004). Unemployment alters the set-point for life satisfaction. Psychological Science, 15, 8–13.CrossRefGoogle Scholar
  41. Luhmann, M., & Eid, M. (2009). Does it really feel the same? Changes in life satisfaction following repeated life events. Journal of Personality and Social Psychology, 97, 363–381.CrossRefGoogle Scholar
  42. Luhmann, M., Hofmann, W., Eid, M., & Lucas, R. (2012). Subjective well-being and adaptation to life events: A meta-analysis. Journal of Personality and Social Psychology, 102, 592–615.CrossRefGoogle Scholar
  43. Lyubomirsky, S. (2011). Hedonic adaptation to positive and negative experiences. In S. Folkman (Ed.), The Oxford handbook of stress, health and coping. Oxford: Oxford University Press.Google Scholar
  44. Mancini, A., Bonanno, G., & Clark, A. E. (2011). Stepping off the hedonic treadmill: Individual differences in response to major life events. Journal of Individual Differences, 32, 144–152.CrossRefGoogle Scholar
  45. Margraf, J., Meyer, A., & Lavallee, K. (2013). Well-being from the knife? Psychological effects of aesthetic surgery. Clinical Psychological Science, 1, 239–252.CrossRefGoogle Scholar
  46. Myrskyla, M., & Margolis, R. (2014). Happiness: Before and after the kids. Demography, 51, 1843–1866.CrossRefGoogle Scholar
  47. Nowok, B., van Ham, M., Findlay, A. M., & Gayle, V. (2013). Does migration make you happy? A longitudinal study of internal migration and subjective well-being. Environment & Planning A, 45, 986–1002.CrossRefGoogle Scholar
  48. Oesch, D., & Lipps, O. (2013). Does unemployment hurt less if there is more of it around? A panel analysis of life satisfaction in Germany and Switzerland. European Sociological Review, 29, 955–967.CrossRefGoogle Scholar
  49. Oswald, A. J., & Powdthavee, N. (2008). Does happiness adapt? A longitudinal study of disability with implications for economists and judges. Journal of Public Economics, 92, 1061–1077.CrossRefGoogle Scholar
  50. Powdthavee, N. (2011). Anticipation, free-rider problem, and adaptation to trade union: Re-examining the curious case of dissatisfied union members. Industrial and Labor Relations Review, 64, 1000–1019.CrossRefGoogle Scholar
  51. Powdthavee, N. (2014). What childhood characteristics predict psychological resilience to economic shocks in adulthood? Journal of Economic Psychology, 45, 84–101.CrossRefGoogle Scholar
  52. Qari, S. (2014). Marriage, adaptation and happiness: Are there long-lasting gains to marriage? Journal of Behavioral and Experimental Economics, 50, 29–39.CrossRefGoogle Scholar
  53. Riis, J., Loewenstein, G., Baron, J., Jepson, C., Fagerlin, A., & Ubel, P. (2005). Ignorance of hedonic adaptation to hemodialysis: A study using ecological momentary assessment. Journal of Experimental Psychology: General, 134, 3–9.CrossRefGoogle Scholar
  54. Rudolf, R., & Kang, S.-J. (2015). Lags and leads in life satisfaction in Korea: When gender matters. Feminist Economics, 21, 136–163.CrossRefGoogle Scholar
  55. Stevenson, B., & Wolfers, J. (2008). Economic growth and subjective well-being: Reassessing the Easterlin paradox. Brookings Papers on Economic Activity, 1(Spring),1–102.Google Scholar
  56. Stutzer, A., & Frey, B. S. (2006). Does marriage make people happy, or do happy people get married? Journal of Socio-Economics, 35, 326–347.CrossRefGoogle Scholar
  57. Van Praag, B. M. (1971). The welfare function of income in Belgium: An empirical investigation. European Economic Review, 2, 337–369.CrossRefGoogle Scholar
  58. Van Praag, B., & Frijters, P. (1999). The measurement of welfare and well-being: The Leyden approach. In D. Kahneman, E. Diener, & N. Schwartz (Eds.), Well-being: The foundations of hedonic psychology. New York: Russell Sage.Google Scholar
  59. Vendrik, M. (2013). Adaptation, anticipation and social interaction in happiness: An integrated error-correction approach. Journal of Public Economics, 105, 131–149.CrossRefGoogle Scholar
  60. Verhaest, D., & Omey, E. (2009). Objective over-education and worker well-being: A shadow price approach. Journal of Economic Psychology, 30, 469–481.CrossRefGoogle Scholar
  61. Von Scheve, C., Esche, F., & Schupp, J. (2013). The emotional timeline of unemployment: Anticipation, reaction, and adaptation. IZA, DP No. 7654.Google Scholar
  62. Weinzierl, M. (2005). Estimating a relative utility function. Harvard University, mimeo.Google Scholar
  63. Winkelmann, L., & Winkelmann, R. (1998). Why are the unemployed so unhappy? Evidence from panel data. Economica, 65, 1–15.CrossRefGoogle Scholar
  64. Wu, S. (2001). Adapting to heart conditions: A test of the hedonic treadmill. Journal of Health Economics, 20, 495–508.CrossRefGoogle Scholar
  65. Wunder, C. (2009). Adaptation to income over time: A weak point of subjective well-being. Schmollers Jahrbuch, 129, 269–281.CrossRefGoogle Scholar
  66. Yap, S., Anusic, I., & Lucas, R. (2012). Does personality moderate reaction and adaptation to major life events? Evidence from the British Household Panel Survey. Journal of Research in Personality, 46, 477–488.CrossRefGoogle Scholar

Copyright information

© Springer Japan 2016

Authors and Affiliations

  1. 1.Paris School of Economics-CNRSParisFrance

Personalised recommendations