He covers some important points, such as how after a certain income level, wealth and happiness become dissociated:
First, he [economist Richard Easterlin] found that as countries get richer, beyond the level where basic needs such as food and shelter are met, people don't report being any happier. For example, although today most Americans surveyed will tell you they are happy with their lives, the fraction of those who say that they are happy is not any higher than it was 40 years ago, when average incomes in the United States were considerably lower and few could even imagine developments like mobile phones or the Internet. Second, he found that--again, once you get above a basic sustenance level--on average, people in rich countries don't report being all that much happier than people in lower-income countries.
And that the little happiness disparity that there is once you're above the basic sustenance level is because of the effect you might call "keeping up with the Joneses":
...though, in any given country, the rich say they are happier than the poor do...
If I live in a country in which most people have only one cow, and I have three cows, then I will have lots of social status and self-esteem and will thus feel happy. But if everyone around me has a luxury car, and I am hung up on status, I won't feel very special unless I have both a luxury car and an SUV. This relative-wealth hypothesis can explain why rich people are happier than poor people in the same country, but also why people in richer countries are not on average much happier than people in poorer countries. It's the big fish in a little pond phenomenon.
All of this is an important distinction that policymakers should take into account far more than they ever do. Here's where Bernanke loses me:
Another thing that most people value is a clean environment. Air and water quality are not included in the broadest measure of economic activity emphasized in government statistics, the gross domestic product (GDP), although some economists have worked on ways to do so. But again, rich countries have more resources to devote to maintaining a clean environment and do tend to have better air and water quality than poor and middle-income countries, notwithstanding the fact that rich countries by definition produce more goods and services. Rich countries also generally provide people more leisure time, less physically exhausting and more interesting work, higher education levels, greater ability to travel, and more funding for arts and culture. Again, these linkages, together with the benefits of enjoying a wide variety of goods and services, are the reason that economic policymakers--at the behest of the public--usually put heavy emphasis on job creation and growth.
Emphasis mine to illustrate the non-sequitur. Maybe it's my mistake to interpret them as part of the same idea because they're in the same paragraph. Maybe it's his mistake to place the segment about the environment before the concluding segment about job creation and growth, so that the environment could be more clearly depicted as an exception. When policymakers place an emphasis on job creation and growth, it is most often with ambivalence toward the environment (though there are ways to promote job creation while keeping nature sacrosanct). It's a little misleading.
But the speech altogether is quite worth reading.
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