Easterlin paradox

Some time later, I realize that the average standard of living has also gone up, so the happiness boost produced by my increased income disappears.

However, in the long run, this proves to be an illusion, since everyone's efforts to raise standards of living lead to increasing averages, leaving everyone in the same place in terms of relative income.

In a 2008 article economists Betsey Stevenson and Justin Wolfers state that “the core of the Easterlin paradox lies in Easterlin’s failure to isolate statistically significant relationships between average levels of happiness and economic growth through time,” and present time series evidence of a significant positive statistical association between happiness and income.

[12] Easterlin and other researchers have examined data from the United States and Japan to analyze a seemingly paradoxical relationship between life satisfaction and economic growth.

Economic growth has not benefitted the majority; median household incomes have grown much more slowly than those of the top 10% over the past four decades.

Therefore, trends in aggregate life satisfaction should not be seen as paradoxical, as the typical US citizen has experienced little growth in income and standard of living.

[14] Outside of economics, two founding fathers in the study of self-reported happiness, Ed Diener in psychology, and Ruut Veenhoven in sociology, have each, with their collaborators, also presented evidence of a significantly positive time series relationship.

“Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles,” Journal of Economic Literature: 46(1), 95-144.