00:00Americans have never been richer, but also more unhappy with the economy.
00:04More Americans have entered the upper-middle class in the last 30 years.
00:08Even lower-income Americans are richer compared to previous generations.
00:11And yet, more than 3 in 5 Americans believe the economy is not working for them.
00:15So why are Americans so unhappy if they're so rich?
00:19One reason could be Westerlin's paradox, and that finds that richer people do tend
00:23to be happier than poorer people, but as a country gets richer, people don't necessarily
00:27get happier, and that could be because it's not just about how wealthy you are, but wealthy
00:33relative to the rest of society.
00:34So if everyone's getting rich alongside you, it doesn't add the same amount of happiness.
00:39It could be that income gains and gains in lifestyle just aren't packing the same punch.
00:43Once your basic needs are met, I mean, what's a new, better iPhone?
00:47This is also explored by behavioral economists Danny Kahneman and Angus Deaton, who found that
00:53people don't get much happier above a certain income level.
00:55They estimated that income level in 2010 was $75,000, which is $115,000 today.
01:01It could also be that trade and technology has changed a lot of our social structures.
01:06Like the China shock, which economists talk about a lot, their increased trade with China
01:10destroyed a lot of jobs in certain communities, also created a lot of jobs and made Americans
01:15pay less for goods.
01:16So if we just look at it from an economic perspective, we should be happier.
01:20But it also broke up communities and social bonds, and that might make people feel more insecure.
01:24We also live in times of material abundance.
01:26We can have anything delivered to our doorstep for near pennies.
01:30On the other hand, a lot of really critical services like healthcare or childcare still
01:35cost a lot, particularly for middle-income families who don't qualify for government benefits.
01:39The return of inflation in the last couple of years has also introduced a lot of uncertainty
01:42into people's lives.
01:44Technology might also be fueling dissatisfaction through social media because we constantly are
01:48looking at people who seem like they have more than us.
01:50So even if happiness in the economy is rooted in feelings more than facts, it still really
01:55matters.
01:56Because if greater prosperity doesn't mean people feel good about the economy, it can become
02:01a self-fulfilling prophecy because we'll start to adopt policies that will actually make
02:05us poorer.
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