The Easterlin Paradox

The Easterlin Paradox has been with Us since my early college career. Now, Stevenson and Wolfers come along, and challenge Easterlin. I am a devotee of Relative Income, knowing that Consumers comparison-Shop; all based upon the Consumption-style of their Income class. Stevenson and Wolfers ignore the modern channelization of Consumer discontent; people claiming they have superior happiness, though they possess great animosity to Sector segments of the economy. I find extreme disgust with Drug Costs, Hedge Fund operations, and the management of Expenditures by the U.S. Congress. The modern Generations do not express their discontent in general terms, while Optional purchasing develops into Necessity spending far more rapidly than in prior years. I will finish by stating that you Spoiled Brats, born as you were with Play Station controls in hand, know not how to rough it. There is a real-life commentary in the previous Statement, something like Our later-day saints (no insult to the Religion intended) know not how to appreciate lack of hunger, and warming Shelter.

Here is something which nullifies some impact of absolute Income; where exactly do you place the division between Relative and Absolute Income? Consumer Price inflation remains a function of Relative Income, Increases coming from Product sectors where there is heavy Demand for Product, retarded by lack of Consumer Interest. Research would probably find that Increases in Income go to segments of the Economy where Inflation is most active; this translating as maintenance of Relative Income standards, rather than a compulsory demand for Absolute Income magnification. I must say, though, that my Argument may not apply to hedge fund managers, who appear to carry pliers around to inherit Grandma’s gold teeth!

Here may be my best defense of my allegation of the power of Relative Income. The Easterlin Paradox held up since 1974, but the Stevenson and Wolfers Paper might not be able to withstand an immediate repetition of the Polls. The power of Absolute Income fades before Relative Income, when Fuel and Health Care Costs inflate by more than 10% per year. The greatest majority of People simply want to hold their position, but it is the innate genius of economics that Most cannot without an enhanced search for additional Income; the great Innovator of the economy. lgl