Week #4 Commentary
a.
* It is interesting that Easterlin Paradox states that richer people are happier than poor people in a certain country, but rich people and poor people are same happy across the whole world.
* It is also interesting that China has great increase in economy, but nothing happens toward the happiness of Chinese. For Egypt and Tunisia, GDP increases, but people are suffering more.
* It is interesting that when people Bob ask can relative income not matter during the process of achieving the goal, Justin answers that even 1% relative income can bring enormous change to absolute income.
b.
1. What is the actual definition of happiness?
2. How relative income effect happiness?
3. People spend a lot of money to celebrate things, does that demonstrate that money buys happiness?
c.
The discussion between Justin and Bob about happiness economics was very exciting. Justin stated that money can buy happiness. He also mentioned about Easterlin Paradox which is explained under first sentence in section a. He showed us a chart of 25 societies of subjective well being of family income, and then he had several claims. One is that within a society richer people are actually happier than poor people. The second one is richer societies are not happier than poor societies. Another one is as society gets richer and happier, money cannot buy you love. He also claim that happiness is not so radical, in fact, it is boring. On the other side, Bob claimed that money does buy happiness. He also showed Adam Smith's thoughts. He thought that people care about relative consumption, more in some domains than in others. Such concerns lead to expenditure arms races focused on positional goods-those goods for which relative position matters most. These arms races direct resources from non-positional goods, causing larger welfare losses. He also showed us some points about expenditure cascades. Top earners spend more because they have more money. This shifts frame of reference for those just below them who also spend more. That in turn shifts the frame of reference for those next below. And so on all the way down the income ladder. Then he went to evidence for expenditure cascade hypothesis, large countries like U.S. with higher growth in 90/50 ratio had higher growth in commute times, divorce rates and bankruptcy rates. So from here we can see that richer countries have more problems and hard issues to deal with which shows that because of those problems happen more frequently in richer countries, people there are not happier than poor people because poor people face fewer problems. I agree with the claim that money does not buy happiness, I think it that way since I was very young. People can be very happy or even happier than those rich people even if you are not as rich as those people. Some people are poor and they really do not have a lot physically entertainment to enjoy, but they do not have problems that are caused by money. They live a simple and happy life.
* It is interesting that Easterlin Paradox states that richer people are happier than poor people in a certain country, but rich people and poor people are same happy across the whole world.
* It is also interesting that China has great increase in economy, but nothing happens toward the happiness of Chinese. For Egypt and Tunisia, GDP increases, but people are suffering more.
* It is interesting that when people Bob ask can relative income not matter during the process of achieving the goal, Justin answers that even 1% relative income can bring enormous change to absolute income.
b.
1. What is the actual definition of happiness?
2. How relative income effect happiness?
3. People spend a lot of money to celebrate things, does that demonstrate that money buys happiness?
c.
The discussion between Justin and Bob about happiness economics was very exciting. Justin stated that money can buy happiness. He also mentioned about Easterlin Paradox which is explained under first sentence in section a. He showed us a chart of 25 societies of subjective well being of family income, and then he had several claims. One is that within a society richer people are actually happier than poor people. The second one is richer societies are not happier than poor societies. Another one is as society gets richer and happier, money cannot buy you love. He also claim that happiness is not so radical, in fact, it is boring. On the other side, Bob claimed that money does buy happiness. He also showed Adam Smith's thoughts. He thought that people care about relative consumption, more in some domains than in others. Such concerns lead to expenditure arms races focused on positional goods-those goods for which relative position matters most. These arms races direct resources from non-positional goods, causing larger welfare losses. He also showed us some points about expenditure cascades. Top earners spend more because they have more money. This shifts frame of reference for those just below them who also spend more. That in turn shifts the frame of reference for those next below. And so on all the way down the income ladder. Then he went to evidence for expenditure cascade hypothesis, large countries like U.S. with higher growth in 90/50 ratio had higher growth in commute times, divorce rates and bankruptcy rates. So from here we can see that richer countries have more problems and hard issues to deal with which shows that because of those problems happen more frequently in richer countries, people there are not happier than poor people because poor people face fewer problems. I agree with the claim that money does not buy happiness, I think it that way since I was very young. People can be very happy or even happier than those rich people even if you are not as rich as those people. Some people are poor and they really do not have a lot physically entertainment to enjoy, but they do not have problems that are caused by money. They live a simple and happy life.
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