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In my understanding, the seminal contribution of Easterlin (1974) showed that within a single cross section, both within and across countries, happiness correlates positively with income. However, growth in income over time within a country is not met with similar increases in happiness. Is my understanding correct?

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  • $\begingroup$ My understanding is that places that are relatively poor which then find higher income in a short time will see a sharp plateau in happiness (and in some places, higher suicide rates). Whether this is because happiness is relative or because the number of people who realize income cannot make them happy increases, you'd have to look at literature beyond Easterlin. $\endgroup$ – Kitsune Cavalry Oct 1 '15 at 19:45
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The basic idea of Easterlin hypothesis is that 10 units of additional income does not require 10 units of additional happiness. The idea is close to the decreasing marginal utility of consumption.

Also, commiting suicides are less in countries where there are so many conflicts. Commiting suicide is more often in countries where prosperity level is higher.

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