Did the Easterlin Paradox apply in South Korea 1980-2015? A case study
Michiel Slag2 Martijn J. Burger and Ruut Veenhoven
International Review of Economics 66(4), 325-351 http://link.springer.com/article/10.1007/s12232-019-00325-w
In 1974, Richard Easterlin presented data showing that there is no relationship between economic growth and average happiness in the United States, but at the same time a higher personal income did go hand-in-hand with greater individual happiness in that nation. This phenomenon came to be known as the ‘Easterlin Paradox’. Easterlin explains this pattern using the relative income theory, which holds that the positive effect of income increase is offset by: (a) adaptation to income change and (b) social comparison. There is discussion as to whether this pattern is universal and, in this context, Easterlin (Easterlin et al. 2010) claims that the enormous economic growth in South Korea over the last decade has not led to an increase in average happiness. In this paper, we report an empirical verification of this claim, using other data on South Korea. Contrary to Easterlin’s claim, we found that South Koreans became happier over time and that the relative happiness theory did not apply in this case.