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The New Economy

Surprise! Rags to riches nations aren't happier.

Moving from poverty to affluence doesn't lead to lasting happiness.

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"With incomes rising so rapidly in these three different countries, it seems extraordinary that there are no surveys that register the marked improvement in subjective well-being that mainstream economists and policy makers worldwide would expect to find," the researchers wrote.

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Wealth and want

The paradox seems impossible on the surface, but there's good reason happiness and income could be linked in the short-term and not over many years, according to Easterlin. As people's incomes rise, he said, so do their aspirations. When incomes fall, he said, aspirations don't. No one wants to give up the standard of living they've grown accustomed to. So in the short term, an economic collapse is painful, while growth feels good.

But in the long run, Easterlin said, more wealth simply creates more want.

"The higher your income goes up the more your aspiration goes up," he said. "Over time, the change in aspirations negates the effect of changing income."

The results suggest that individuals and policy makers should focus on non-monetary factors, like health and family concerns, that influence happiness, Easterlin said.

"Economic growth may not be the way you get happier," he said. "There are other avenues that may produce more happiness."

Easterlin said he expects further controversy about his paradox — "Policy makers are generally very reluctant to accept this conclusion about economic growth," he said — and a counterargument came shortly after the paper's release. Writing for the New York Times' Freakonomics blog, University of Pennsylvania economist Justin Wolfers argued that the new study doesn't prove the Easterlin paradox exists.

"In putting together his dataset, he sort of picks and chooses what he wants to include," Wolfers told LiveScience. The surveys Easterlin and his colleagues analyzed asked questions about life satisfaction in different ways and can't be lumped together, Wolfers said.

"What he's got is noisy data," Wolfers said. "In noisy data, it can be hard to find a significant correlation, but that doesn't mean the result is zero."

Editor's note: This article has been updated to include Wolfers' response.