Easterlin: When Growth Outpaces Happiness

My attempt to defend the social safety net in a recent column received a fairly ho-hum response, so let me see if (and hope that) Richard Easterlin can do better:

When Growth Outpaces Happiness, by Richard Easterlin, Commentary, NY Times: ... As the recent riots at a Foxconn factory in northern China demonstrate, growth alone, even at sustained, spectacular rates, has not produced the kind of life satisfaction crucial to a stable society — an experience that shows how critically important good jobs and a strong social safety net are to people’s happiness.

Starting in 1990, as China moved to a free-market economy, real per-capita consumption and gross domestic product doubled, then doubled again. Most households now have at least one color TV. Refrigerators and washing machines — rare before 1990 — are common in cities.

Yet... If anything, they are less satisfied than in 1990, and the burden of decreasing satisfaction has fallen hardest on the bottom third of the population in wealth. ... It is startling to find ... a U-shaped pattern of happiness over time... What explains the “U” at a time of unprecedented economic growth?

Before free-market reforms kicked in, most urban Chinese workers enjoyed what was called an “iron rice bowl”: permanent jobs and an extensive employer-provided safety net, which included subsidized food, housing, health care, child care, pensions and jobs for grown children. Life satisfaction ... among urban Chinese, despite their much lower levels of income, was almost as high as in the developed world.

The transition to a more private economy in the 1990s abruptly overturned the iron rice bowl. ... Life satisfaction in urban areas declined markedly..., its market transition has given birth to increasing concerns ... about such matters as finding and holding a job, the availability of reliable and affordable health care, and provision for children and the elderly. ...

It is noteworthy that at a time when the need for a strong safety net is under attack in the United States, the world’s most fervent capitalist nation has inadvertently demonstrated its critical importance for people’s happiness.