Economics and happiness

Easterlin paradox
1) Within a society, rich people tend to be much happier than poor people.
2) But, rich societies tend not to be happier than poor societies (or not by much).
3) As countries get richer, they do not get happier.
Easterlin argued that life satisfaction does rise with average incomes but only up to a point. Beyond that the marginal gain in happiness declines.
Relative income hypothesis:
Individual's attitude to consumption and saving is dictated more by his income in relation to others than by abstract standard of living. So people really care about how their living standard is compared to their neighbor's.


Justin is against Easterlin paradox:
1) Rich people are happier than poor people
2) Richer countries are happier than poorer countries
3) As countries get richer, they tend to get happier.


In the long run, GDP and happiness tend to move together.


Happiness is measured by survey, but the question is its accuracy and reliability.
What's interesting is that Justin looks differently at the graph which shows that American people are not happier although the increase of GDP is remarkable.
(1)The survey excludes rich people.
(2)The GDP growth is not equal to every American, so most people don't have increase of wealth, and thus they are not happier.


My question is : Are countries happier because they are richer or maybe happier countries become richer because of more optimism in making decisions about investments or something else?


I also think it a good point made by Bob Frank that adaption of context can make us happy. He combines biology with economics, which is very novel to me.


I think it plausible to consider Charles Darwin as the pioneer of economics. Darwin's opinion is natural selection, which emphasizes competition, and it is exactly the essence of free market. But personally I still regard Adam Smith as the first full time economist ever.