Money may buy happiness (or not): economists renew debate

WASHINGTON, May 25, 2008 (AFP) – The saying goes that money can’t buy happiness. But inquiring economists have been working for decades trying to prove or disprove the notion. Resarchers at the University of Pennsylvania’s Wharton School of Business released a study in April showing “a clear positive link” between wealth and “subjective well-being,” based on global surveys.

While this may seem logical to some, the research flew in the face of a longstanding theory that happiness of a country’s population does not rise with income, after certain basic needs are met.

This theory, dubbed the “Easterlin Paradox,” was developed in 1974 by Richard Easterlin, an economist currently on the faculty at the University of Southern California.

Easterlin’s research had drawn on surveys notably from Japan, where surveys had shown little or no increase in national happiness despite the country’s post-World War II economic miracle.

Wharton economists Betsey Stevenson and Justin Wolfers contend in the new research that better data over the past three decades and a closer analysis suggests the Easterlin Paradox is flawed.

They found that the wealthiest countries in terms