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R K

$33,000 Gdp/per Capita Is The 'bliss Point'

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The link between higher national income and higher national life satisfaction is critical to economic policymaking. This column presents new evidence that the connection is hump-shaped. There is a clear, positive relation in the poorer nations and regions, but it flattens out at around $30,000–$35,000, and then turns negative.

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<h1>An explanation for the bliss point

If, following the above-mentioned literature, the relation between GDP and life satisfaction is the result of combined effects of aspirations to increase personal income, or an increasing target in terms of income comparison, then the net effect on life satisfaction is not necessarily monotonic. In Proto and Rustichini (2012), we provide a micro-founded model, where income is endogenous and increases with aspirations. If the probability of fulfilling aspirations is decreasing in aspirations, this can generate a negative effect on life satisfaction that can counterbalance the positive direct effect of the income.

We test this hypothesis using the European data, and find the usual positive effect due to personal income and a negative effect due to the negative distance between personal income and regional GDP. We argue that this second effect can be related to the negative effect induced by the distance from the target income. We use modern personality theory to test the hypothesis, predicting that this effect should be higher for more neurotic individuals, naturally more averse to losses. We find support in the data for this explanation.

Conclusions

Our econometric analysis implies that long-term GDP growth is certainly desirable among poorer countries, but is it a desirable feature among developed countries as well? Recent evidence shows the negative effect of high aspiration can also be rationally predicted by individuals who, nevertheless, may still choose options that may not seem to maximise happiness, but which are compatible with high-income aspirations.

This implies that individuals may still prefer to live in richer countries, even if this would result in a decreased level of life satisfaction. In other words, the fact that individuals aspire to a higher income may not be considered – from an individual perspective – a negative feature of an economy even if this might result in a lower level of reported life satisfaction among the richest countries.

UK is around $36,500 in 2012 at PPP.

This is as much bliss as we can handle folks.

Edited to add GDP at PPP world ranking

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita

Edited by R K

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GDP is a dangerous lie invented and perpetuated by economists who want to pretend that they can produce an objective measure of human wellbeing.

If everybody suddenly moved house so they had to commute twice as far to get to work as before, GDP would go through the roof as everybody started consuming extra cars and fuel and childcare and legal services for divorce and medical treatment for stress-related illness.

We should abandon the GDP lie as soon as possible because it encourages politicians to implement policies which increase GDP irrespective of whether or not they actually make peoples lives better (e.g. high house prices forcing both adults in a couple to work full time and pay for large quantities of childcare).

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we'll see a lot more of this propaganda in the future. Global equality. The west must suffer to pay for everyone else.

Can you link to the bit where it says that. Thanks.

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GDP is a dangerous lie invented and perpetuated by economists who want to pretend that they can produce an objective measure of human wellbeing.

If everybody suddenly moved house so they had to commute twice as far to get to work as before, GDP would go through the roof as everybody started consuming extra cars and fuel and childcare and legal services for divorce and medical treatment for stress-related illness.

We should abandon the GDP lie as soon as possible because it encourages politicians to implement policies which increase GDP irrespective of whether or not they actually make peoples lives better (e.g. high house prices forcing both adults in a couple to work full time and pay for large quantities of childcare).

Partly agree.

Latest obsession being fracking.

i.e. We'll all be better off it only French energy companies can extract a bunch of fossil fuels from under out feet in order to pay themselves bigger bonuses.

GDP is way past its sell-by

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GDP is a dangerous lie invented and perpetuated by economists who want to pretend that they can produce an objective measure of human wellbeing.

If everybody suddenly moved house so they had to commute twice as far to get to work as before, GDP would go through the roof as everybody started consuming extra cars and fuel and childcare and legal services for divorce and medical treatment for stress-related illness.

We should abandon the GDP lie as soon as possible because it encourages politicians to implement policies which increase GDP irrespective of whether or not they actually make peoples lives better (e.g. high house prices forcing both adults in a couple to work full time and pay for large quantities of childcare).

Aboslutely right. GDP is a dangerous, distorting figure that gives media talking heads an easy lie foundation to make people feel good. Economists should be embarrassed that they haven't come up with a better way of measuring how successful a human society is.

Edited by wherebee

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Partly agree.

Latest obsession being fracking.

i.e. We'll all be better off it only French energy companies can extract a bunch of fossil fuels from under out feet in order to pay themselves bigger bonuses.

GDP is way past its sell-by

a nation can produce nothing at all and yet have GDP at whatever level they want...depends where they look in the formula.

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Exactly. The continuing floods will be adding plenty to the GDP figures from the costs of materials and labour for emergency additional protection, rehousing, cleanup, repairs, rebuilding, replacement of property (cars, furniture ...). That any of this does anything more than provide a slight uplift against the stress, pain, anger and frustration experienced by those affected is laughable.

GDP is a dangerous lie invented and perpetuated by economists who want to pretend that they can produce an objective measure of human wellbeing.

If everybody suddenly moved house so they had to commute twice as far to get to work as before, GDP would go through the roof as everybody started consuming extra cars and fuel and childcare and legal services for divorce and medical treatment for stress-related illness.

We should abandon the GDP lie as soon as possible because it encourages politicians to implement policies which increase GDP irrespective of whether or not they actually make peoples lives better (e.g. high house prices forcing both adults in a couple to work full time and pay for large quantities of childcare).

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Economists should be embarrassed that they haven't come up with a better way of measuring how successful a human society is.

Since when has measuring or promoting emotional satisfaction been part of an economist's responsibilities?

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GDP is a dangerous lie invented and perpetuated by economists who want to pretend that they can produce an objective measure of human wellbeing.

I think the problem with GDP (apart from it being a bit crap) is that it becomes a target rather than a measure*. I bet the various governments who indulged loved HPI if for no other reason.

* the perennial problem with targets everywhere...

Edited by tomandlu

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Since when has measuring or promoting emotional satisfaction been part of an economist's responsibilities?

Did I mention emotional satisfaction as the be al? Economists state a high GDP/growth country is 'successful' and a low GDP/growth country is 'unsuccessful', ignoring a multitude of factors such as pollution, mental wellbeing, health, education, social mobility, happiness, social cohesion, living space, etc etc.

That is why economists are idiots, if not exactly evil. They knowlingly ignore reality to make it fit their academic peer group *****fests.

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Did I mention emotional satisfaction as the be al? Economists state a high GDP/growth country is 'successful' and a low GDP/growth country is 'unsuccessful', ignoring a multitude of factors such as pollution, mental wellbeing, health, education, social mobility, happiness, social cohesion, living space, etc etc.

That is why economists are idiots, if not exactly evil. They knowlingly ignore reality to make it fit their academic peer group *****fests.

Not sure about the second half of that sentence, the knock on effects of their actions are evil enough. Otherwise, couldn't agree more.

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a nation can produce nothing at all and yet have GDP at whatever level they want...depends where they look in the formula.

How about Gross Private Production (GPP) =C + I + (X-M). Including government spending in GDP means that more G = higher GDP. As a lot of G is borrowed, using GDP implies that debt is wealth.

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Can you link to the bit where it says that. Thanks.

Our econometric analysis implies that long-term GDP growth is certainly desirable among poorer countries, but is it a desirable feature among developed countries

Oh, its very subtle at the moment, but believe me, these jackals will slowly condition us to a life of malaise and stagnation.

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I think the problem with GDP (apart from it being a bit crap) is that it becomes a target rather than a measure*. I bet the various governments who indulged loved HPI if for no other reason.

* the perennial problem with targets everywhere...

Ohh Systems Thinking, nice :-)

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I think the problem with GDP (apart from it being a bit crap) is that it becomes a target rather than a measure*. I bet the various governments who indulged loved HPI if for no other reason.

No, the problem is that GDP is utter ********. As is the whole idea of summing up a nation's economy in a single number.

But it keeps a lot of economists in comfy jobs.

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Yeah "bliss" :rolleyes:

Grim housing, mass REAL unemployment, awful congestion...............................the list is endless - sheer bliss.

That's not to say that of course the UK isn't a bit better off than quite a few other nations on various economic measures, but bliss :o - what are they on.

Edited by billybong

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Yeah "bliss" :rolleyes:

Grim housing, mass REAL unemployment, awful congestion...............................the list is endless - sheer bliss.

That's not to say that of course the UK isn't a bit better off than quite a few other nations on various economic measures, but bliss :o - what are they on.

Good innit.

Happiness decreases once GDP/capita hits c. $33k

UK experience tends to support that theory.

Of course it may be that the distribution isn't a healthy one in the UK

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