Economic Growth and Well‐Being: A Behavioural Analysis

Abstract

The great American vaudeville singer Sophie Tucker remarked, ‘I've been rich and I've been poor – and believe me, rich is better.’ This book, which documents in great detail and insight the vast growth in per capita income in the United States and Britain (with some attention to other countries) over the past century, contrasts Sophie Tucker's widely shared sentiment with the carefully researched fact that people are getting richer, but they are not getting happier. What, asks Offer, accounts for this curious situation? An earlier generation answered this question by noting that being richer involves both having more than before, and having more than others. If relative status is important but absolute wealth is not, argued Frank (1985), then when everyone becomes richer, average well‐being will not increase. Indeed, this had been the common view (although with numerous dissenters), since Duesenbury's famous ‘ratchet effect’ explanation of the...