Question

In: Economics

The implicit assumption, when economists assess the performance of an economy by looking at its level...

The implicit assumption, when economists assess the performance of an economy by looking at its level of income per person or at its growth rate, is that higher income per person leads to more happiness. Does money lead to happiness? Back up your answer with concrete evidence (such as research findings).

Solutions

Expert Solution

Yes, higher income per person leads to the higher level of happiness within the economy. The relationship becomes stronger, when the different level of income and happiness is observed by the research (Easterlin, R.A., 1974). Though, there are weak relationship between the income and the happiness when the data of the different economies are studied. So, there is a significant role of relative income in deciding the happiness. A relatively higher income over and above the median income leads to higher level of happiness. Other research work also found that higher income in the rich economies makes the person capable to get the quality benefits, services and facilities that enhance the quality of life (Hershfield, 2013). As a result, happiness level increases.

References:

1. Easterlin, R.A. (1974). Does economic growth improve the Human lot? Some Empirical Evidence. Retrieved from: http://graphics8.nytimes.com/

2. Does More Money Make You Happier? Hershfield H.E. Retrieved from: https://www.psychologytoday.com/

Full web URL cannot be given due to the answering board guidelines.


Related Solutions

What are the differences between implicit and explicit costs? Why do economists include implicit costs when...
What are the differences between implicit and explicit costs? Why do economists include implicit costs when determining economic profits? Do accountants include them? How can the inclusion of implicit costs help businesses and individuals select options that yield the greatest net benefits? Using the concept of implicit costs, explain how they affect the economic costs of attending college? Or starting your own business?
When looking at changes in the level of spending, this can directly influence an economy. What...
When looking at changes in the level of spending, this can directly influence an economy. What are some of the challenges that firms will be facing when consumers start to spend more money?
A review of the economic performance of Canadian economy by economists at the Bank of Canada...
A review of the economic performance of Canadian economy by economists at the Bank of Canada suggests that the economy has an inflationary output gap. Explain how the Bank of Canada could use monetary policy instruments to close the inflationary output gap. Explain the process (mechanism) through which this occurs.
Does the assumption of stuck prices hold true when the economy moves close to its potential...
Does the assumption of stuck prices hold true when the economy moves close to its potential output? Explain.
When looking into covariance, the OLS assumption is that the error term has a population mean...
When looking into covariance, the OLS assumption is that the error term has a population mean of 0. What does the error term mean? what does this: cov(ui, us) ≠ 0 mean?
When the economy is at its full employment level, is the unemployment rate zero? Justify your...
When the economy is at its full employment level, is the unemployment rate zero? Justify your answer.
When looking at overlap of I/O during processing: a. What is the impact on performance when...
When looking at overlap of I/O during processing: a. What is the impact on performance when overlapping the I/O and execution of a single process? b. What is the impact when overlapping I/O of one process with execution of a different process?
Waterfield Company is looking for a way to help its executive managers assess how the three...
Waterfield Company is looking for a way to help its executive managers assess how the three divisions within the company are meeting the company's overall goals and objectives. The company is looking for a(n) a. performance measurement system b. product costing system c. standard cost system d. activity-based accounting system Waterfield Company is looking for a way to help its executive managers assess how its three divisions are meeting the company's goals and objectives for financial performance. Which of the...
1) When aggregate price level in the economy falls, then the interest rate in the economy...
1) When aggregate price level in the economy falls, then the interest rate in the economy falls, which leads to an increase in investment expenditure in the economy. This phenomenon is called: A) the wealth effect B) the interest rate effect C) the exchange rate effect D) the investment effect 2)The Quantity Theory of Money can be used to explain why: A) SRAS curve is downward sloping B) SRAS curve is upward sloping C) AD curve is downward sloping, AD...
Primo Management Co. is looking at how best to evaluate the performance of its managers. Primo...
Primo Management Co. is looking at how best to evaluate the performance of its managers. Primo has been hearing more and more about benchmark portfolios and is interested in trying this approach. As such, the company hired Sally Jones, CFA, as a consultant to educate the managers on the best methods for constructing a benchmark portfolio, how best to choose a benchmark, whether the style of the fund under management matters, and what they should do with their global funds...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT