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My Research

Developed countries have achieved substantial increases in national income over the last 50 years, yet this increased wealth has not generally been accompanied by rises in average well-being. In spite of this evidence economic growth remains a priority for many developed countries. My research seeks to understand, firstly, why economic growth is not making us any happier and, perhaps more importantly, why we still act as if it will.

It was Richard Easterlin who first considered whether economic growth had improved the human lot. In his influential 1974 paper he also considered the happiness levels of different income groups and found, somewhat paradoxically to his first finding, that people with more money are generally happier. Together these two famous findings have become known as the Easterlin Paradox and form the cornerstone of much “happiness” research in economics. The most common explanation of the Easterlin Paradox is that an individual’s well-being is not influenced by rises in absolute income but instead by how much income the individual has compared to everyone else. The consequence of this relative explanation is that if everyone’s income rises at the same rate then no-one will actually be any happier. The individual’s income would need to rise at a greater rate than everyone else’s income to bring any improvement to their well-being.

This concern for relative improvements, or perhaps more simply status, also offers a possible explanation as to why people are motivated by money. From a fear of falling behind this “keeping up with the Joneses” effect can often result in everyone working harder but with no real benefit to their well-being. My research has looked at aspects related to the individual’s concern for status. Firstly, with Andrew Oswald, I have looked at whether improvements to job status, or more simply promotion, result in better health (we find that a job promotion can in some instances result in increased mental strain - this research has been covered in the media). Secondly, with Gordon Brown, I have been investigating the importance of income rank for individual well-being.

I am also interested in alternative explanations as to why economic growth does not geneally increase well-being. An important factor often not fully appreciated is that income explains only about 1% of an individual’s well-being. There are other factors, such as personality, social relationships and the prevalence of depression, that explain much more of an individual’s well-being. We often find that personality acts as a third variable, driving individuals to be both happier and earn more income. This reduces further the effect that increasing income might have on well-being. Some of my research seeks to highlight to economists the importance of personality for well-being. For example, personality can help us understand the fixed components of well-being, which in turn can help us understand how economic circumstances can benefit individuals. Some of my work also has important implications for policy and, with Alex Wood, I have suggested that increasing the availibility of mental health care could be a faster route to increased well-being than income growth (some links to media coverage of this research can be seen here and here).

 

 

Collaborators:

Gordon Brown

Professor, Department of Psychology

The University of Warwick, CV4 7AL

Andrew Oswald

Professor, Department of Economics

The University of Warwick, CV4 7AL

Alex Wood

Lecturer, School of Psychological Sciences

University of Manchester, M13 9PL