Remembering Richard Easterlin: Rethinking Well-Being and Growth (HEN Editorial 338)

Easterlin’s para­dox res­haped my per­spec­tive on well-being, eco­no­mics, and the limits of mate­rial wealth

While the sad news of Richard Eas­ter­lin’s pas­sing rea­ched my desk some­what late, I had to pause for a moment to reflect on his impact on my own deve­lo­p­ment in my more for­ma­tive years. Alt­hough Eas­ter­lin is a highly uncon­ven­tio­nal eco­no­mics aut­hor, he is hardly lis­ted among key hete­ro­dox sources and thin­kers. None­thel­ess, I have to admit that the Eas­ter­lin para­dox and rela­ted deba­tes about its robust­ness and vali­dity had an important impact in my for­ma­tive years as it made clear to me that con­tent­ment, con­fi­dence and satis­fac­tion are subtle and com­pli­ca­ted things. In turn, they pose a conundrum to eco­no­mists of all per­sua­si­ons as, effec­tively, our noti­ons of social wel­fare should to some ext­ent encom­pass and cap­ture these noti­ons. Some approa­ches side-step these chal­lenges and assume rele­vant ans­wers have to be exo­ge­nously given, others take the under­ly­ing task more seriously and ask, how and under what con­di­ti­ons does mate­rial affluence con­tri­bute to the good life

Moreo­ver, Easterlin’s famous para­dox dia­gno­ses a de-cou­pling of mate­rial growth (i.e. rising GDP) and sub­jec­tive well-being, which ser­ves to pro­voke all those, who assert that there is an uncon­di­tio­nal, more or less linear map­ping of mate­rial wel­fare to effec­tive well-being. And indeed, while qua­lity of life builds on mate­rial means in many ways, the actual rela­ti­onship is more subtle. For ins­tance, when cor­re­la­ting GDP with other dimen­si­ons included in the Human Deve­lo­p­ment Index (just to take ano­ther estab­lished mea­sure of well-being), we will find a strong cor­re­la­tion. But we will also find many non-ran­dom, struc­tu­ral out­liers – count­ries that see­mingly get less or less well-being out of an addi­tio­nal dol­lar of income (see also here for a more sophisti­ca­ted exam­ple of this line of reaso­ning). For ano­ther, qua­lity of life in many Euro­pean cities is asto­nis­hin­gly high alt­hough many of these now wit­nessed deca­des of rather low growth or even stagnation.

In my very hum­ble view, there is much to gain when inspec­ting and deli­be­ra­ting this ques­tion from a hete­ro­dox view­point. An imme­diate con­cern that comes fore in such a per­spec­tive is one shared with Eas­ter­lin namely that the dis­tri­bu­tion of income mat­ters as much as its average so that con­ven­tio­nal mea­su­res that neglect aspects of ‚rela­tive income’ only cap­ture half of the story. Ano­ther core point from a hete­ro­dox per­spec­tive is that social infra­struc­tures mat­ter as they have great influence on how the pro­vi­sio­ning of daily neces­si­ties impacts well-being in terms of time, money and social inclu­sion. In other words, it is our foun­da­tio­nal eco­nomy that mat­ters greatly for deter­mi­ning how and to what ext­ent mate­rial wealth trans­la­tes into over­all well-being. And, finally, issues of working time and qua­lity of work co-deter­mine well-being out­co­mes rela­ted to mate­rial con­sump­tion or com­fort – how much and under what con­di­ti­ons, we earn the income to spend is the often over­loo­ked other side of the coin (see here or here for pos­si­ble start­ing points on this).

Now before this exten­ded abs­tract about the intri­cate and highly inspi­ring rela­ti­onship bet­ween the works of Eas­ter­lin in par­ti­cu­lar and hete­ro­dox eco­no­mics in gene­ral evol­ves into a full paper, let me, before clo­sing, report some edi­to­rial news: Even though we are no busi­ness eco­no­mics news­let­ter we deci­ded to diver­sify our (social-media)-portfolio ;-) We joi­ned large parts of aca­de­mia and resett­led our major account from X to BlueSky (@heterodoxnews.bsky.social); we, howe­ver, will con­ti­nue to post updates on new issues on X and Mast­o­don also and see where all this goes in the near future…

All the best,