A Literature Review on the Explanations and Theories of the Easterlin Paradox

Abstract

This article is a literature review of the explanations and theories of the Easterlin paradox. The Easterlin paradox had been well researched in multiple interpretation paths, focusing on either the micro or macro level of the paradox. However, it has not been able to provide a perfect explanation for the paradox so that policies can be formulated and implemented. To facilitate future research, the past and latest research on theories of the Easterlin paradox will be organized and criticized. It will be shown that theories of direct and indirect mental mechanisms had their main problem with single factor analysis, while theories of external social mechanisms lacked dynamic analysis. This synthesis of current research will be helpful for further research on the real causes and solutions of the Easterlin paradox.