The best-known finding that questions the association between wealth and human well-being is the so called Easterlin paradox, discovered by economist Richard Easterlin in the early 1970s. Easterlin (1974) found, through comparative analysis, that once basic needs are met, wealth is correlated with happiness within countries at a given point in time but that richer countries are not happier than less wealthy ones. Moreover, as afluent countries grew wealthier, they did not become happier. As an example, Easterlin points out that indices of happiness did not change in the United States between 1947 and 1970, even though income and wealth increased greatly over that period.12 Following Easterlin’s research, David G. Blanchflower and Andrew J. Oswald (2004) found that happiness in the United States between the mid-1970s and mid-1990s failed to increase, even as per capita income increased by close to 60 percent.13 Research by Bruno S. Frey and Alois Stutzer (2002), examining the United States over the same period, indicates that while real income increased for nine of the ten deciles in the population, average happiness only increased (and by a very slight amount) for the lowest decile. According to their data, the overall average level of happiness actually declined in the United States between the 1970s and the 1990s. Avner Ofer (2006), in an overview of the literature on the relation between economic growth and happiness, concurs with Easterlin’s assessment that well-being in afluent nations over time has not risen with rising income.14
The Puzzle
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