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"Money Can’t Buy Happiness" Redux

Does economic growth increase a nation’s well-being? Mainstream economists and politicians have long claimed “yes,” and have made growth the sine qua non of development policy. However, numerous empirical studies have challenged the equation of money and happiness in affluent countries, and now new studies show that the correlation is weak in developing countries as well. In China, for example, economic output per capita grew some 400% between 1990 and 2010, but the sense of well-being reported by the Chinese people declined on average. The reason is that the benefits derived from higher incomes have been more than offset by the adverse impacts of societal changes, particularly the diminution of the social safety net and increasing income inequality. These changes stemmed from China’s shift toward a “market-based economy,” which succeeded dramatically in its means—economic growth—but not in its ends: human well-being.

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