In the past couple of years, it’s been interesting to observe a promising idea—that happiness should count as much as economic indicators—become almost mainstream. This week, for example, The Economist published a long, meandering article that examines the concepts of relative poverty and relative happiness. It compares two men—a doctor in Congo and a retired coal miner worker in Kentucky—who earn about the same amount of absolute income. The contrast proves to be a good set-up for some provocative questions:

What is the relationship between wealth and happiness? And what is the significance of relative poverty? Mr Banks makes $521 a month in a country where median male earnings are $3,400 a month. Dr Kabamba earns $600 a month in a country where most people grow their own food and hardly ever see a bank note. The two men’s experiences could hardly be less similar. But which of the two would one expect to be happier?

Puzzlingly, though, the article doesn’t fully explore this question. It does bring up some important factors, such as the complexities of measuring happiness across different cultures and geographies; the role of relative wealth and poverty; and the role of politics and geography (both Congo and Appalachia are known for mineral wealth and corrupt politics).

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  • But it neglects the new wealth of research that has been released on the economics of in recent years—and one of the most consistent findings: that the correlation between financial wealth and well-being is relatively weak, especially as countries become wealthier (see this post). The US and Canada aren’t doing too badly on the happiness scale, but neither are countries that have a far smaller GNP per capita.

    As more large-scale studies of happiness are completed, perhaps The Economist will pay closer attention to why indicators of subjective well-being matter—not just as an interesting lifestyle comparison, but as tools that can be eventually used in public policy. For now, though, we’ll have to be happy with seeing happiness make it into the news.

    P.S. The article includes a discussion on the validity of the United States’ poverty rate, suggesting that America overcounts the number of poor. For a healthy debate on the poverty rate as a measure, see this post.