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

We examine the average economic status of baby boom cohorts as they approach retirement chiefly using data on their life cycle income experience to date. Contrary to popular impression, baby boomers are likely to enter old age in an even better economic position than pre-boom cohorts. Economic and demographic adjustments that they made, such as deferred marriages, reduced childbearing, and increased labor force participation of wives, have compensated for their relatively low wage rates. Potential downside effects of reduced childbearing regarding Social Security and health care prospects are discussed.

Retirement Prospects of the Baby Boom Generation: A Different Perspective

The striking thing about the happiness-income paradox is that over the long-term – usually a period of 10 years or more – happiness does not increase as a country's income rises. Heretofore the evidence for this was limited to developed countries. This article presents evidence that the long term nil relationship between happiness and income holds also for a number of developing countries, the eastern European countries transitioning from socialism to capitalism, and an even wider sample of developed countries than previously studied. It also finds that in the short-term in all three groups of countries, happiness and income go together, i.e., happiness tends to fall in economic contractions and rise in expansions. Recent critiques of the paradox, claiming the time series relationship between happiness and income is positive, are the result either of a statistical artifact or a confusion of the short-term relationship with the long-term one.

https://papers.ssrn.com/sol3/Delivery.cfm/dp5799.pdf?abstractid=1872747&mirid=1&type=2

The Happiness-Income Paradox Revisited

In little more than a century life expectancy has doubled in most parts of the world Neither facts nor theory support the view that this Mortality Revolution is due to the Industrial Revolution and the era of rapid economic growth that ensued Rather, both revolutions mark the onset of accelerated and sustained technological change in their respective areas They occur largely independently of each other, the later occurrence of the Mortality Revolution being due to the later development of biomedical vis-a-vis physical knowledge Comparative study of the two should prove fruitful Although entrepreneurship is important in each, there appear to be differences in the underlying motivations and the role of private property and other institutions Links between technological change, on the one hand, and scale of operation, capital inputs, and education, on the other, also offer promising possibilities for comparative study

Industrial revolution and mortality revolution: Two of a kind?

New estimates of fertility and population in the United States : a study of annual white births from 1855 to 1960 and of completeness of enumeration in the censuses from 1880 to 1960

Building on an interpretation of a numbr of recent economic and demographic changes previously advanced by this writer (Easterlin 1987) this analysis covers the causes of the new age structure of poverty especially the increased poverty rate of children and the prospects for its continuation over the rest of the 20th century. In contrast to the view that the gains of either the children or the elderly have been at the expense of the other group i.e. expanded government programs underlying the improved status of the elderly have been purchased by sacrificing programs for the young it is suggested that the divergent trends in poverty rates of children and the elderly chiefly reflect 2 different and largely independent causes: the improved status of the elderly is attributable largely to government action especially advances in social security; and the rise in the poverty rate of children is to an important extent a result of market forces and would have occurred even in the absence of programs improving the lot of the elderly. The base period for most of this analysis is the late 1960s when annual series on poverty rates of persons by age and on income by family status and age first became available. Families and unrelated individuals are classified as being in poverty if their money income (including retirement and disability pensions government cash-transfer payments alimony and child support) falls below a threshold level based upon the Department of Agricultures Economy Food Plan. The rise in the poverty rate of children is part of a broader pattern of shifting poverty status of young versus old. The increase in poverty rates from 1968-85 is progressively smaller with age and for those aged 55 and older the poverty rate decreases absolutely. In 1968 the highest poverty rate 25% was found among the elderly those 65 and older; children the only other above-average group had a rate of about 15%. As a result of the disparate trends by age the elderly now have a below-average rate less than 13%. For those under age 65 divergent trends in poverty rates by age are at bottom a reflection of similar labor market trends. Real wage rates of younger males as measured by year-round full-time income have declined noticeably relative to older males. Younger females also show deterioration in real wages relative to those of older females but the magnitude is less. The labor market conditions of younger adults have affected their poverty rates not only directly through their impact on income within given types of families but also indirectly by shifting the family-type distribution toward female-headed families. Childrens poverty rates have suffered more than those of younger adults because of the more severe impact on children of the shifts in demographic structure.

Richard A. Easterlin

Papers

Retirement Prospects of the Baby Boom Generation: A Different Perspective

The Happiness-Income Paradox Revisited

Industrial revolution and mortality revolution: Two of a kind?

New estimates of fertility and population in the United States : a study of annual white births from 1855 to 1960 and of completeness of enumeration in the censuses from 1880 to 1960

The new age structure of poverty in America: permanent or transient?