Kenneth Rogoff touches upon an interesting subject - the relation between the economic growth and the people's well-being:
"But there might be a problem even deeper than statistical narrowness: the failure of modern growth theory to emphasize adequately that people are fundamentally social creatures. They evaluate their welfare based on what they see around them, not just on some absolute standard.
The economist Richard Easterlin famously observed that surveys of “happiness” show surprisingly little evolution in the decades after World War II, despite significant trend income growth. Needless to say, Easterlin’s result seems less plausible for very poor countries, where rapidly rising incomes often allow societies to enjoy large life improvements, which presumably strongly correlate with any reasonable measure of overall well-being."
My comments:
This should certainly excite the participants of the Israeli social protests, who pointedly complained that the healthy state of the Israeli economy indicators has nothing to do with their well-being.
My objection is that we can hardly measure happiness. In fact, I doubt that one can talk about growth of happiness between generations - it is too personal a category. Every generation estimates its level of happiness by the worst level of the unhappiness that it has known: regardless of how high we make today the welfare benefits and the taxes on "the rich," and regardless of how low we make the apartment rent and the prices on the cottage cheese - thirty years from now our children will wine just like we do that the welfare is decreasing, that rich do not pay enough, and that the prices are too high.
On the contrary, some policies used to promote growth can directly undermine a range of the factors that do contribute to well-being, such as the time we need to spend with family, health, equality and fairness.
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