Monkeys, Economics and Happiness

Sep 7, 2012 • Behavioral Economics, Economic Humor, Economic Thinkers, Households, Labor, Macroeconomic Measurement, Money and Monetary Policy, Thinking Economically, Uncategorized • 106 Views    1 Comment

Behavioral economists might be able to explain our response to income inequality.

In a paper on money and happiness, economist Richard Easterlin initially asks the reader how she feels if her income rises. Then he asks how she reacts when it stays the same.

His goal is to display that more than changes in your own income, it matters what happens to everyone else.  If everyone else’s income remains the same when yours rises, then you feel pretty good. However, if your income remains the same when others make more, you feel less well off.

Perhaps this “Easterlin Paradox” (that explores the connection between money and happiness) explains the nation’s response to the rising incomes of the top 1%. Also, it relates to the monkey in this very funny video.

 

Easterlin’s paper on happiness is here, and the Freakonomics blog that present links to work that refutes it is here.

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  • Julian foster

    HILARIOUS. Especially the grabbing and shaking of the plexiglass. And the Occupy analogy at the end was very witty. Thanks for sharing that.

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