The Price of Glee in China
This is Easterlin’s Paradox, the observation that a country in general does not get happier as it becomes richer. This is very controversial, with statisticians analyzing and reanalyzing data and crunching it a bunch of different ways. In the latest volley in this eternal war, Easterlin’s side came out with data from 37 countries over 30 years, including many countries that underwent spectacular growth during that time, and confirmed their original conclusion
.. Here we see a lot of cultural variation in this apparent happiness-income relationship. For example, Latin American countries are consistently poor but happy; Eastern European countries are usually richer but sadder than African countries, et cetera. Looking at the original graph above, you’d expect Chinese growth to make them much happier; looking at this graph, you notice that China’s three rich neighbors – Japan, Taiwan, and South Korea – are all about as happy as China. South Korea, despite making five times more money, is less happy than China is. If China’s income quintuples, why would you expect it to look like France or Ireland rather than South Korea?
.. A UN report theorizes that although richer countries tend to be happier, this is more likely due to factors other than income, like freedom, social trust, and stable families.
.. Let’s assume for a second that all this is true. National income does not matter for national happiness, and if China’s growth continues to skyrocket then in twenty years it will be as rich as Japan but not an iota happier than it is today. What do wedo with this kind of knowledge?
.. Or let me ask a more specific question. Suppose that some free trade pact will increase US unemployment by 1%, but also accelerate the development of some undeveloped foreign country like India into hyper-speed. In twenty years, India’s GDP per capita will go from $1,500/year to $10,000/year. The only cost will be a million or so extra unemployed Americans, plus all that coal that the newly vibrant India is burning probably won’t be very good for the fight against global warming.