This paper examines whether the Solow growth model is consistent with the international variation in the standard of living. It shows that an augmented Solow model that includes accumulation of human as well as physical capital provides an excellent description of the cross-country data. The paper also examines the implications of the Solow model for convergence in standards of living, that is, for whether poor countries tend to grow faster than rich countries. The evidence indicates that, holding population growth and capital accumulation constant, countries converge at about the rate the augmented Solow model predicts. This paper takes Robert Solow seriously. In his classic 1956 article Solow proposed that we begin the study of economic growth by assuming a standard neoclassical production function with decreasing returns to capital. Taking the rates of saving and population growth as exogenous, he showed that these two vari- ables determine the steady-state level of income per capita. Be- cause saving and population growth rates vary across countries, different countries reach different steady states. Solow's model gives simple testable predictions about how these variables influ- ence the steady-state level of income. The higher the rate of saving, the richer the country. The higher the rate of population growth, the poorer the country. This paper argues that the predictions of the Solow model are, to a first approximation, consistent with the evidence. Examining recently available data for a large set of countries, we find that saving and population growth affect income in the directions that Solow predicted. Moreover, more than half of the cross-country variation in income per capita can be explained by these two variables alone. Yet all is not right for the Solow model. Although the model correctly predicts the directions of the effects of saving and

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A Contribution to the Empirics of Economic Growth

The literature on subjective well-being (SWB), including happiness, life satisfaction, and positive affect, is reviewed in three areas: measurement, causal factors, and theory. Psychometric data on single-item and multi-item subjective well-being scales are presented, and the measures are compared. Measuring various components of subjective well-being is discussed. In terms of causal influences, research findings on the demographic correlates of SWB are evaluated, as well as the findings on other influences such as health, social contact, activity, and personality. A number of theoretical approaches to happiness are presented and discussed: telic theories, associationistic models, activity theories, judgment approaches, and top-down versus bottom-up conceptions.

Subjective Well-Being

W. Wilson's (1967) review of the area of subjective well-being (SWB) advanced several conclusions regarding those who report high levels of "happiness". A number of his conclusions have been overturned: youth and modest aspirations no longer are seen as prerequisites of SWB. E. Diener's (1984) review placed greater emphasis on theories that stressed psychological factors. In the current article, the authors review current evidence for Wilson's conclusions and discuss modern theories of SWB that stress dispositional influences, adaptation, goals, and coping strategies. The next steps in the evolution of the field are to comprehend the interaction of psychological factors with life circumstances in producing SWB, to understand the causal pathways leading to happiness, understand the processes underlying adaptation to events, and develop theories that explain why certain variables differentially influence the different components of SWV (life satisfaction, pleasant affect, and unpleasant affect).

Subjective Well-Being: Three Decades of Progress

W Wilson's (1967) review of the area of subjective well-being (SWB) advanced several conclusions regarding those who report high levels of "happiness" A number of his conclusions have been overturned: youth and modest aspirations no longer are seen as prerequisites of SWB E Diener's (1984) review placed greater emphasis on theories that stressed psychological factors In the current article, the authors review current evidence for Wilson's conclusions and discuss modern theories of SWB that stress dispositional influences, adaptation, goals, and coping strategies The next steps in the evolution of the field are to comprehend the interaction of psychological factors with life circumstances in producing SWB, to understand the causal pathways leading to happiness, understand the processes underlying adaptation to events, and develop theories that explain why certain variables differentially influence the different components of SWB (life satisfaction, pleasant affect, and unpleasant affect) In 1967, Warner Wilson presented a broad review of subjective well-being (SWB) research entitled, "Correlates of Avowed Happiness" Based on the limited data available at that time, Wilson concluded that the happy person is a "young, healthy, welleducated, well-paid, extroverted, optimistic, worry-free, religious, married person with high self-esteem, job morale, modest aspirations, of either sex and of a wide range of intelligence" (p 294) In the three decades since Wilson's review, investigations into SWB have evolved Although researchers now know a great deal more about the correlates of SWB, they are less interested in simply describing the demographic characteristics that correlate with it Instead, they focus their effort on understanding the processes that underlie happiness This trend represents a greater recognition of the central role played by people's goals, coping efforts, and dispositions In this article, we review research on several major theoretical approaches to well-being and then indicate how these theories clarify the findings on demographic correlates of SWB Throughout the review we suggest four directions that researchers should pursue in the decades ahead These are by no means the only questions left to answer, but we believe they are the most interesting issues left to resolve First, the causal direction of the correlates of happiness must be examined through more sophisticated methodologies Although the causal priority of demographic factors such as marriage and income is intuitively appealing, it is by no means certain Second, researchers must focus greater attention on the interaction between internal factors (such as personality traits) and external circumstances As we shall see, demographic factors have surprisingly small effects on SWB, but these effects may depend on the personalities of those individuals being studied Thus, future research must take Person X Situation interactions into account Third, researchers must strive to understand the processes underlying adaptation Considerable adaptation to both good and bad circumstances often occurs, yet the processes responsible for these effects are poorly understood Research that examines how habituation, coping strategies, and changing goals influence adaptation will shed much light on the processes responsible for SWB Finally, theories must be refined to make specific predictions about how input variables differentially influence the components of SWB In the past, many researchers have treated SWB as a monolithic entity, but it is now clear that there are separable components that exhibit unique patterns of relations with different variables In each section of this article we discuss progress and opportunities in these four areas

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Subjective well-being: Three decades of progress

https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=2651&context=soss_research

Subjective Well-being

At a point in time subjective well-being is positively related to income; over the life course subjective well-being is constant despite substantial growth in income. This paradox is explained by new evidence on consumption aspirations. At a point in time aspirations vary fairly little by income level; over the life cycle, aspirations increase about in proportion to income. These shifts in aspirations also affect assessments of past and future well-being in such a way that the choices underlying behavior (based on what psychologists call “decision utility”) turn out not to have their expected welfare effects (experienced utility). Of the two influences shaping consumption aspirations – comparisons with others and with one’s past experience – the former appears more salient early in the life cycle and the latter, later on.

Life cycle welfare: evidence and conjecture

The second in a series of books published with the IZA, this volume presents Richard Easterlin's outstanding research on the analysis of subjective well-being, and on the relationship between demographic developments and economic outcomes. In both fields, his work has laid the foundations for enlarging the scope of traditional economic analysis and has increased our understanding of behaviour in several important domains, such as fertility choices, labour market behaviour, and the determinants of individual well-being. In various seminal contributions, Easterlin has demonstrated the importance of material aspirations and relative economic status for human behaviour. This book is a collection of 11 of his key papers, revised and edited to make a cohesive book. New material includes an Introduction from the editors, two section Introductions from Easterlin, and an Epilogue from Easterlin.

Happiness, Growth, and the Life Cycle

In the last two decades the largest single change in career plans of college students is the more than doubling from 1972 to 1987 of the proportion opting for business. The evidence suggests that a shift in preferences, a marked upsurge among the young in money-making as a life goal, was responsible for this, as well as movements in ‘prices,’ the relative returns from different occupations. The rise in interest in money-making is not due to greater insecurity among the young about their economic future, or worsened job expectations. Rather, it reflects greater concern about money among older adults, which influenced the young with a lag by re-shaping their life goals as they grew up. Empirical study of occupational choice would benefit from more attention to such non-market influences.

Preferences and prices in choice of career: The switch to business, 1972–1987

For American baby boomers, altered demographic behavior has been the key to transforming adverse labor market conditions into favorable living levels. The economic well-being of baby boomers is, on average, higher than that of their predecessors, because they are disproportionately remaining single, having fewer children, doubling up with others, forming unmarried couple unions, and coupling mother's work with childbearing. In the 1980s, baby boomers share in common with all cohorts an increase in income inequality. In contrast to the findings on average income, demographic changes had little effect on the trend in inequality of economic well-being compared with that in earnings.

How have American baby boomers fared? Earnings and economic well-being of young adults, 1964–1987

This chapter provides a selective survey of ­cross-sectional and time series evidence on the empirical relation between quality of life and modern economic growth. The phenomenon of modern economic growth, so-named by Nobel Laureate Simon Kuznets (1966), marks a new epoch in the economic history of humankind, and first appeared on the world scene in the latter part of the eighteenth century in northwestern Europe. It may be defined as a rapid and sustained rise in real output per head and attendant shifts in production technology, factor input requirements, and the resource allocation of a nation. “Rapid and sustained” is taken here to mean an average growth rate of real GDP per capita that approaches 1.5% per year or more over at least half a century. A rate of 1.5% per year is about the average in the half century before World War I for the group of 15 nations that were the leaders in modern economic growth. It is unprecedented in human history—projecting real per capita output backward from, say 1850, at a 1.5% annual rate would in a matter of a few centuries yield income levels well below the margin for human survival. In the last half of the twentieth century, growth rates in many parts of the developed and developing world have substantially exceeded 1.5% per year.

https://www.econstor.eu/bitstream/10419/34625/1/550862501.pdf

Richard A. Easterlin

Papers

Life cycle welfare: evidence and conjecture

Happiness, Growth, and the Life Cycle

Preferences and prices in choice of career: The switch to business, 1972–1987

How have American baby boomers fared? Earnings and economic well-being of young adults, 1964–1987

Modern Economic Growth and Quality of Life: Cross Sectional and Time Series Evidence