Heterodox Economics Newsletter

Issue 338 January 27, 2025 web pdf Heterodox Economics Directory

While the sad news of Richard Easterlin's passing reached my desk somewhat late, I had to pause for a moment to reflect on his impact on my own development in my more formative years. Although Easterlin is a highly unconventional economics author, he is hardly listed among key heterodox sources and thinkers. Nonetheless, I have to admit that the Easterlin paradox and related debates about its robustness and validity had an important impact in my formative years as it made clear to me that contentment, confidence and satisfaction are subtle and complicated things. In turn, they pose a conundrum to economists of all persuasions as, effectively, our notions of social welfare should to some extent encompass and capture these notions. Some approaches side-step these challenges and assume relevant answers have to be exogenously given, others take the underlying task more seriously and ask, how and under what conditions does material affluence contribute to the good life.

Moreover, Easterlin's famous paradox diagnoses a de-coupling of material growth (i.e. rising GDP) and subjective well-being, which serves to provoke all those, who assert that there is an unconditional, more or less linear mapping of material welfare to effective well-being. And indeed, while quality of life builds on material means in many ways, the actual relationship is more subtle. For instance, when correlating GDP with other dimensions included in the Human Development Index (just to take another established measure of well-being), we will find a strong correlation. But we will also find many non-random, structural outliers – countries that seemingly get less or less well-being out of an additional dollar of income (see also here for a more sophisticated example of this line of reasoning). For another, quality of life in many European cities is astonishingly high although many of these now witnessed decades of rather low growth or even stagnation.

In my very humble view, there is much to gain when inspecting and deliberating this question from a heterodox viewpoint. An immediate concern that comes fore in such a perspective is one shared with Easterlin namely that the distribution of income matters as much as its average so that conventional measures that neglect aspects of 'relative income' only capture half of the story. Another core point from a heterodox perspective is that social infrastructures matter as they have great influence on how the provisioning of daily necessities impacts well-being in terms of time, money and social inclusion. In other words, it is our foundational economy that matters greatly for determining how and to what extent material wealth translates into overall well-being. And, finally, issues of working time and quality of work co-determine well-being outcomes related to material consumption or comfort – how much and under what conditions, we earn the income to spend is the often overlooked other side of the coin (see here or here for possible starting points on this).

Now before this extended abstract about the intricate and highly inspiring relationship between the works of Easterlin in particular and heterodox economics in general evolves into a full paper, let me, before closing, report some editorial news: Even though we are no business economics newsletter we decided to diversify our (social-media)-portfolio ;-) We joined large parts of academia and resettled our major account from X to BlueSky (@heterodoxnews.bsky.social); we, however, will continue to post updates on new issues on X and Mastodon also and see where all this goes in the near future...

All the best,

Jakob

PS: The inaugural conference of the Center for Heterodox Economics (CHE) at Tulsa University on "What's up with capitalism?" that is taking place from 6th to 8th February will also be streamed online – how exciting ;-) More details on this can, of course, be found below.

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