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Happiness and Money: Parallel Worlds

After 20 years of rapid economic growth (≥ 8 %) residents of the PRC (People's Republic of China) turn out to be generally less happy than they used to be in the early 1990s . Who is to blame: energetic capitalism or weak social state ?
be-in-the-loop - Happiness and Money: Parallel Worlds

After 20 years of rapid economic growth (≥ 8 %) residents of the PRC (People’s Republic of China) turn out to be generally less happy than they used to be in the early 1990s . Who is to blame: energetic capitalism or weak social state?

China is a very happy country. At least compared to Europe or the U.S.: it is on the 20th place in the Happy Planet Index (HPI), America – on 114th one. The reasons for this are clear: rich countries are characterized by less happy citizens, and China, although it has the largest GDP per capita than Honduras (which, incidentally, is on the 10th place thankfully), is inferior nearly six times to the USA.

be-in-the-loop - Happiness and Money: Parallel Worlds
be-in-the-loop - Happiness and Money: Parallel Worlds

It is interesting, however, that the distribution of happiness in the Chinese society itself is very inhomogeneous. Richard Easterlin, professor of economics at the University of Southern California (USA) in his new research published in Proceedings of the National Academy of Sciences states: “There is no evidence of increasing life satisfaction in those figures, which one would hope for, having four times as much growth per capita consumption”. It appears that among 10% of the most prosperous Chinese the life satisfaction has grown up a little bit for the past twenty years, among the middle strata it has not changed, but among the poor it has fallen much stronger than it rose for the rich.

Richard Easterlin, as you remember, of course, became a celebrity in 1974 when he published his work which indicated that although life satisfaction can grow a bit due to improvement of material conditions but only to a certain and very limited point beyond which any improvement in life does not lead to higher satisfaction with it. Although, say, the lack of food, he noted, reduces the level of a person’s happiness, but as soon as his basic needs (food and a minimum of durables) are satisfied, further increase of welfare does not change the subjectively perceived happiness. The phenomenon became known as the Easterlin paradox.

According to Easterlin, it was unusual that there was a clear decline as for life satisfaction among the Chinese in the 1990s and early 2000s, followed by the rise in 2006 giving U-shape to a twenty-year schedule of life satisfaction…

be-in-the-loop - Happiness and Money: Parallel Worlds

…It seriously intrigued the researcher. After trying different economic indicators he isolated the level of unemployment as having an inverted U-shaped graph. According to him, it is the growth of unemployment that caused decline of satisfaction among the Chinese, while the subsequent absolute and relative decline in the number of unemployed returned satisfaction to the level of the 1988-1990 year period.

Easterlin’s opponents were quick to point to that conspicuous fact that his observation is contrary to the situation in Hong Kong, where unemployment is only 3.4 % (vs. 6.5% in China in general), but the level of satisfaction is significantly lower than that of the Chinese in general (the 84th place in the world against the 20th in China). But here it should be noted that the overall economic level of Hong Kong is much greater than that in China as a whole. GDP per capita in Hong Kong is six times bigger than (or even higher than, say, in the U.S.). So it is hardly appropriate to directly compare Hong Kong and the whole Heavenly Empire: as a decent level of income per capita is just not compatible with a high level of life satisfaction. Indeed the international index of happiness does not have a single developed country (except a couple of rich oil kingdoms) in the top ten, i.e. there is simply no country that became rich by their labor.

Therefore, Mr. Easterlin finds it possible to make the following conclusion, which , perhaps, may lack originality, but it doesn’t lack common sense: “It would be wrong to assume basing on the experiences of the inhabitants of China in life satisfaction that a return to socialism and extreme inefficiencies of central planning could have a favorable outcome [for the growth of public satisfaction] … However, our data suggest an important political lesson: employment and confidence and assurance that you have them tomorrow , along with the social security system are of critical importance for life satisfaction [nation-wide]“.

It is a pity that politicians never read … scientific works especially. 

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