The Easterlin Paradox in Italy, or the Paradox in Measuring? Define Happiness Before Investigating It

Abstract

The Easterlin paradox (Easterlin, in: Paul, Reder (eds) Nations and household in economic growth: essay in honor of Moses Abramovitz, Academic Press, New York, 1974), for many researchers, is the starting point of studies on the relationship between happiness and GDP and states that after reaching a certain level of income, happiness decreases instead of increasing. The Comparison Theory (Schyns in Soc Indic Res 43:3–2, 1998) and Van Praag and Kapteyn’s (Eur Econ Rev 4(1):33–62, 1973) also show that if an individual’s income increases, it is not related into an increase in income satisfaction and the same mechanism applies to happiness, depending on several aspects. Today and in the future not only the growth of income but also the achievement of happiness have become a political objective and politicians will direct their policy towards these objectives. Furthermore, the interpretation of the relation between GDP and happiness remains one of the most recurring controversial errors in the framework and methodology used, although understanding of what makes people happy helps politicians to direct their policies. In Italy the Easterlin paradox seems to have found confirmation, but not a historical explanation also because the study of the relation between GDP and happiness, confirming the need to use appropriate indicators in the study of the relationship between economic development and happiness, for instance alternative national accounts indicators for GDP, or antidepressant expenditure for (un)happiness. The paper suggests “to define happiness before investigating it”, proposing a definition of happiness that also indicates an appropriate methodology to analyze if people can be happy in the economic system.