The opening paragraph:

When measured in terms of financial gyrations and national employment, 2008 was an absolutely terrible year. When measured in terms of production, the United States economy in 2008 was the best in its history.

A quick recap… Generally we might assume that as a country’s income goes up, so does the happiness or general satisfaction of the residents of that country. In other words, greater real per capita GDP means higher income, which means a greater standard of living, and thus more contentment.

Reasonably enough, this straightforward connection bothers those who believe that contentment can come from sources other than income and standard of living. Leonhardt summarizes past research on this point – in particular what became known as the Easterlin paradox. Easterlin found, after studying data in Japan, that rapid growth in income in that country did not result in increases in satisfaction. Easterlin concluded that the absolute level of income wasn’t the principal driver of satisfaction – but instead it was someone’s income relative to their peers. If they got richer than their friends, their satisfaction went up.

Now, two Penn economists – Stevenson and Wolfers – have done some new studies and explored some of Easterlin’s old data. Their conclusion? That absolute income is, after all, more important.

You can make your own conclusions by following the links to these articles, and beyond. What is important is to think critically about what increases in real GDP mean to our country, and the degree to which we should seek continued growth in that measure.