1For details regarding evidence cited here and elsewhere in this paper see Easterlin 1996, 2000

this gain is projected by the United Nations to be largely sustained, despite the problem of HIV, before a marked upward trend resumes a decade hence. Important strides have also been made in sub-Saharan Africa with regard to the reduction of illiteracy, and there are signs too of incipient fertility decline.

The picture also varies depending on the aspect of the human condition that one looks at. If one were to focus on the prevalence of political democracy, there would be little evidence of improvement over the last half century, although the shift from colonial rule to independence in a number of countries must be recognized as an important advance in the political realm.

Despite these qualifications, the pieces of evidence I have given demonstrate, I believe, that the world is embarked on a sweeping transformation of the human condition. Moreover, this process is irreversible, because it is rooted in unprecedented breakthroughs in human knowledge about the natural and social world, and, short of global catastrophe, this knowledge will not be lost. As substantive evidence of this immense acceleration in the growth of knowledge, let me note:

1. Discoveries in West European physics from 1650 to 1700, the time now hailed as the "Scientific Revolution," were occurring at an average rate of less than two per year. Two centuries later the rate was more than 15 times greater.

2. On the progress of bio-medical knowledge following the validation of the germ theory in the last quarter of the nineteenth century, a medical historian, writing in 1983, says: "In a single century the understanding of disease increased more than in the previous forty centuries combined" (Hudson 1983, p.121, italics added).

3. In the social realm, there exist today for dealing with the problem of unemployment once viewed as an "act of God" or as punishment for individual failings -- the new governmental tools of monetary and fiscal policy that largely reflect the progress of economic science in the twentieth century. In addition, there are now institutions for international cooperation on economic policy, which, though imperfect, were nonexistent a century ago.

Obstacles

A look at on-going experience thus suggests that the world is embarked on an unprecedented transformation in living conditions -- a transformation that can reasonably be projected to continue throughout the 21st century as scientific and technological knowledge, natural and social, continues to grow and diffuse throughout the world. But the lessons of the past also suggest that this future will not be easily achieved, for there are serious obstacles along the way.

A favorite obstacle for some is population growth. It is now clear, however, that the population explosion is a transient condition, as demographic research suggested over a half century ago. As I have noted, rates of childbearing in less developed countries have fallen sharply. Current United Nations projections foresee population growth rates of less than 1 percent per year in the less developed world in little more than a decade and a half.

More problematical is the environmental impact of modern economic growth. In the last several decades, awareness has grown that modern economic growth carries with it a number of adverse consequences in the form of air pollution, water pollution, and depletion of soil and forest resources. The result has been an upsurge of concern about environmental degradation. Again, a look at past experience is helpful. The current environmental movement bears a strong resemblance to the public health movement of the nineteenth century, which was precipitated by the sanitation and crowding problems of rapid urbanization. These earlier problems were in the course of time successfully solved by advances in technological knowledge and social organization, most notably by the establishment of a public health system (Easterlin 1999). It is perhaps optimistic to suppose that a similarly successful response will be made to environmental degradation, but clearly substantial resources are currently being devoted to the problem, and the outlines are emerging of needed new technologies, institutions, and public policies to deal with it. A World Bank study in 1992 concluded that "continued, and even accelerated, economic and human development is sustainable and can be consistent with improving environmental conditions" (World Bank 1992, p. iii, italics in original).

By far, the most worrisome obstacle to continued improvement is the international political repercussions of the further spread of modern economic growth. Although economic growth is not the only source of political conflict, it has been the most pervasive and powerful factor in the last two centuries. This is because economic growth and its underlying technology bestow on a populous nation a vast increase in military potential and thus in political power. Since 1800 the differential occurrence of modern economic growth in a world of competing nation-states has created vast disturbances in the international balance of power. It has led to a temporary extension of political sovereignty by more developed over less developed countries and to repeated challenges to the leaders in development by latecomers to the scene, erupting in world wars. The leadership of Great Britain throughout much of the nineteenth century and the subsequent appearance of rivals such as Germany and the United States, followed by Japan and the former Soviet Union, corresponds to the timing and spread of modern economic growth.

The foundation for the current world power structure is the economic gap between rich and poor nations. As this gap is narrowed -- as more and more populous less developed countries become members of the developed set -- power must shift to the newer members as it has in the past. One can hardly be sanguine that this redistribution of world political power will be successfully accomplished, because the solution of this problem, in contrast to that of environmental degradation, rests even more on social than natural science and because both awareness of and concern for this problem remain so limited.

Is there a "Hierarchy of Needs"?

Let us suppose, however, that catastrophic international upheaval is averted and the transition to worldwide human development is successfully completed. If this comes to pass, what will the world be like? Will "the economic problem" have been put to rest and humanity turn to more meaningful pursuits? Will humanity have made the great leap into freedom that Karl Marx once envisaged?

Ever since psychologist Abraham Maslow's (1954) "hierarchy of needs," it has been widely assumed that the satisfaction of material wants is but one, lower, stage in human evolution and that economic growth brings with it a movement toward higher nonmaterialistic ends (cf., e.g., Fogel 1997, p.1905; Cox and Alm 1999, ch. 9; van de Kaa 1999, pp. 29ff). According to Maslow, humans have a variety of needs, and they satisfy them in a certain order. For a person on the margin of existence, food is everything. Physical safety comes next; its priority is almost as high as that of sustenance, but a starving man will risk his life to get food. Once an individual has satisfied material needs -- those for physical and economic security-- "at once other (and higher) needs emerge and these, rather than physiological hungers, dominate the organism"(ibid., p.83, italics in original). These higher needs are, first, needs for love, belonging, and esteem. Later, intellectual and aesthetic goals, which Maslow calls "self- actualization needs," become important. Thus, he offers a vision of human progress from the struggle for physical survival to total personal fulfillment.

The arrival of this happy day has been proclaimed over the last several decades by a prominent American political scientist, Ronald Inglehart, based on numerous surveys he has conducted here and in Europe (Inglehart 1977, 1988, 1997). Since World War II, the West has enjoyed a half century of unprecedented peace and prosperity. With the satisfaction of material needs in this period, Inglehart claims -- as do a number of American and European colleagues --there has emerged a new generation of individuals, characterized by higher "postruaterialist" values -- social and self-actualization goals. To judge from Inglehart, humankind is seemingly becoming less engrossed with what nineteenth century political economist John Stuart Mill called "the art of getting on" (lower case) and is, at last, turning to "the Art of Living" (upper case).

But is it? I think that the facts are to the contrary. Rather, the evidence suggests that economic growth is not a mere stage in human development that frees humankind from the burden of physiological needs and thereby fosters the attainment of higher cultural needs. Instead, economic growth is a carrier of a culture of its own that ensures that humankind is forever ensnared in material pursuits.

A starting point is some evidence on human happiness. Since World War II a large number of representative national surveys have been conducted in various countries, in which respondents are asked a simple question about how happy they are -- very happy, fairly happy, not very happy, or not happy at all. In these surveys each person is free to define happiness in his or her own terms. Hence, one might suppose that no useful comparisons of persons could be made. As it turns out, however, the factors affecting happiness are fairly similar for most persons, and scholars studying these data have concluded that meaningful comparisons can be made among sizeable groups of people. When individuals are asked what is most important in determining their happiness, we find that everywhere the leading concern is worries about one's economic condition, next are family and health matters, and, after these, and far less frequently mentioned by respondents, are concerns usually remote from an individual's everyday life --civil liberties, social justice, equality of the sexes, and the like. It is clear that for most persons everywhere, happiness is governed by the things that take up most of one's personal everyday life -- making a living, and raising and maintaining a healthy family.

The critical importance of economic conditions is indicated by the fact that in every survey ever conducted the rich are, on average, happier than the poor. (This does not mean, of course, that every rich person is happy, and every poor person, unhappy -- as I said, I am talking here about comparisons among groups of people.)

This finding of a positive point-of-time relation between happiness and income would lead one to expect, of course, that the vastly higher levels of real income that economic growth brings would lead to advances in satisfaction or happiness in the same -- positive -- direction. And this is where the "catch" comes -- the paradox of happiness, if you wish. Over time, happiness does not rise with income, even with very large increases in income. Let me cite a few examples:

1. In the United States since World War II, real per capita income has more than doubled. The average level of happiness, however, is the same today as it was in the late 1 940s.

2. The story is similar for Europe. There are nine European countries for which happiness-type measures go back at least two decades. Between the 1 970s and 1 990s real income per capita rises substantially in all of these countries, by amounts ranging from 25 to 50 percent. In five of the nine countries, happiness is unchanged; in two it goes up, and, in two, it goes down. Net change in happiness for all nine countries: zero.

3. The experience of Japan is of special interest, because of its relevance to today's low income countries. The happiness data for Japan go back to the late 1950s, when Japan had an income level below that of many of today's less developed countries. Between the 1950s and late 1980s Japan had the most phenomenal economic growth ever witnessed. Consumer durables, like refrigerators, washing machines, and TVs, were virtually nonexistent at the start of the period; by the end, almost every household had them. Car ownership rose from 1 to 60 percent of households. In only three decades real income per capita multiplied by an incredible five-fold. What happened to happiness during this period of unparalleled income growth? The answer is, no change.

4. Finally, let me shift from the country as the unit of analysis to the cohort, that is, a group of persons born in the same span of years, such as 1946 to 1950. You can think of this, if you wish, as a generation. If one follows an American birth cohort or generation over their adult life cycle, one finds that average income rises steadily and substantially throughout the working years, and then levels off. Does this growth in income mean that people, on average, get happier as they progress through the life cycle? The answer is no. For the typical cohort happiness is remarkably stable throughout the entire adult life cycle.

One may reasonably ask: what does all this have to do with Maslow's and Inglehart's progression up the hierarchy of needs? The answer is, a lot. For in resolving the paradox of happiness, we are led to understand the way that economic growth is preparing our future.

At a point in time happiness and income are positively related; yet, over time there is no relation. Why this paradoxical pattern? A simple thought experiment suggests the basic reason.

Imagine that your income increases substantially while everyone else's stays the same. Would you feel better off? The answer most people would give is yes. Now suppose that your income stays the same, while everyone else's increases substantially. How would you feel? Most people would say that they feel less well off, despite the fact that there has actually been no change in their real income or living level.

Now what this thought experiment is demonstrating is that judgments of personal wellbeing ("happiness") are made by comparing one's objective situation with a subjective living level norm, and this internal norm is significantly influenced by the average level of living of the society as a whole. If the average living level in society increases, there is a rise in subjective living level norms -- the measure of how people feel they ought to live. In this situation -- of incomes increasing generally -- an individual whose income is unchanged will feel poorer, even though his or her objective circumstances are the same as before. Karl Marx put it this way: "A house may be large or small; as long as the surrounding houses are equally small it satisfies all social demands for a dwelling. But if a palace rises beside the little house, the little house shrinks into a hut."

Hence, while happiness, or subjective well-being, varies positively with one's own income, it also varies negatively with the incomes of others. At any given time, the incomes of others are fixed, and those who are more affluent feel happier, on average. This is the point-of-time relationship. However, raising the incomes of all does not increase the happiness of all, because the positive effect on one's well-being of higher income for oneself is offset by the negative effect of a higher living level norm brought about by the growth in incomes generally.

Stated simply, material aspirations -- how we feel we ought to live -- depend on a society's state of affluence. In times and places where incomes are lower, aspirations are lower.

As incomes rise, aspirations rise.

1. A point-of-time comparison of aspirations in rich and poor countries comes from a very comprehensive survey done by social psychologist Hadley Cantril several decades ago, who asked people an open-ended question on what they would need to be "perfectly happy." Here are some answers from respondents in India (Cantril 1965, pp.205-206, 222):

An illiterate 35-year-old agricultural laborer says:

A 30-year-old sweeper says:

A 45-year-old housewife says:

Finally, here is the response of a 40-year-old skilled worker:

Now compare what Americans at that time said they would need to be perfectly happy. Here's a 27-year-old skilled worker:

A laboratory technician, 34-years-old, says:

Here's a 24-year-old bus driver:

And, finally, a 28-year-old lawyer:

These responses illustrate how the aspirations one acquires are a product of the one lives, and the more affluent the society, the higher the material aspirations.

2. That is how aspirations differ between a rich and poor country at a point in time. Next, let me indicate how material aspirations change over time within a country. Since 1975, society in which Americans have been asked the following question: "We often hear people talk about what they want out of life. When you think of the good life -- the life you'd like to have -- which of the things on the [following] list [of 24 items], if any, are part of that good life as far as you personally are concerned?

Ten of the "good life" items listed relate specifically to consumer goods -- "a home you own," "a car," "a color TV," and so forth. For every one of the ten consumer goods listed, there is an increase between 1975 and 1994 in the percentage identiifng it as "part of the good life." For consumer goods to which a high proportion of the population aspired at the start of the period, the increase is necessarily modest. But for items that were initially low on the "good life" list, the increase is sizeable. In 1975, the proportion of Americans saying "a vacation home" was part of the good life was 19 percent; two decades later it was 44 percent. In 1975, the proportion identifying a swimming pool as part of the good life was 14 percent; in 1994, 37 percent.

These data are at sharp variance with Ronald Inglehart's claim that since World War II there has been an emergence of post-materialist values that has "tended to neutralize the emphasis on economic accumulation" (Inglehart 1988, p.1203). The basis for Inglehart's claim is the responses to survey questions about what the aims of a nation should be for the next ten years. Such questions, however, do not tap the personal aspirations of individuals; rather, it relates to what people want for their country. As Hadley Cantril demonstrated over 30 years ago, there is a great difference between people's responses when asked about their concerns for their country versus their personal concerns, that is, the goals that motivate them (Cantril, 1965; cf. also Clark and Rempel 1997, chs. 1-4).

In contrast to Inglehart's questions relating to national goals, the good life data I have just cited ask specifically about one's personal interests -- "the life you 'd like to have," "the things [that] are part of [the] good life as far as you personally are concerned."

Let me cite two other "good life" responses that bear on the purported emergence of "postmaterialist" values. Besides specific consumer goods, the good life list includes items relating to job characteristics that people view as forming part of the good life. Two are of special interest here -- one, "a job that pays much more than the average" and the other, "a job that contributes to the welfare of society." We may, I think, take the former (pays much more than the average) as relating chiefly to materialist values, and the latter (contributes to society), to postmaterialist values. Both in 1975 and 1994, the percentage of people naming the former (the materialist response) as part of the good life exceeded the latter (the nonmaterialist response). But even more important, if we look at the trend in responses reflecting materialist concerns relative to those reflecting social concerns, the excess of those with materialist concerns rose between 1975 and 1994 from 7 to 21 percentage points. This suggests a shift toward materialist values, not away from them. This shift may eventually prove to be a fluctuation, rather than a long term trend, but it is clearly at variance with Inglehart's claim of a movement away from materialist values in this same period.

Implications

It is time now to consider the implications for the future of this evidence. As I have noted, a common theme of Maslow and his disciples is the liberating effect of economic progress

-- that as material wants become satisfied, people will increasingly turn to higher order pursuits. But suppose that material needs are never satisfied -- that each step up on the ladder of material abundance brings with it a new set of material desires -- a swimming pool, a tennis court, an exercise room, a vacation home, a private security system, and so on -- desires which, we tell ourselves, if they were only satisfied, would make us perfectly happy?

Indeed, the evidence is that this is the human condition. When asked, people invariably say that higher income will increase their happiness. Yet, when they actually do get more income, their happiness does not increase. The explanation of this paradox is that when people project into the future the likely effect on their happiness of higher income, they are basing the projection on their current subjective level of material aspirations. What they do not realize is that, as incomes in society rise generally, so too will their views on their own material needs, and the effect of this increase in their subjective needs will be to negate the expected growth in happiness due to higher realized income.

The world today is in the midst of a great cultural revolution brought about by the spread of economic growth. Country after country, culture after culture -- including the ancient cultures of Japan, China, India, and Persia -- are falling before the juggernaut of economic growth. A new universal religion is sweeping the world -- the worship of economic goods. Just consider today's youth. Throughout the world they hail the same music groups, follow the same sporting events, and aspire to similar Nike-like lifestyles. Language is no barrier; historical culture is no barrier. The mass media, the messengers of economic growth, have brought the word to every corner of the earth -- money is the key to happiness. Not a whole lot of money, of course; just enough to live "happily." But what the public does not know is the elastic nature of 'lust enough" -- that its magnitude will always be rising from one generation to the next -- the proverbial carrot on a stick.

One may ask, if we know that we are caught on this "hedonic treadmill" can't we get off? Can't we gain control of it? Can't knowledge -- such as that laid out here -- set us free?

As an educator and scholar, I would like to think that the answer to this question is yes. But as I reflect on my own, personal, experience of happiness, it makes me wonder about one's ability to reshape on rational grounds, norms that are ingrained by one's socialization experience.

As a scholar, my own happiness depends very much on the recognition accorded my work. I have, no doubt, received much more recognition than I deserve. But much of this has come from disciplines other than economics -- indeed, many economists would dismiss out of hand the subjective testimony on happiness that I have used in this talk. Nevertheless, I find myself, as an economist, tending to discount the recognition of non-economists, and to look to economists for assessments of my work. Rationally speaking, I know I would be happier if the internal norm entering into my judgment of happiness was not based on my training as a professional economist. But that knowledge does not make it easier for me to remake the norm that is the product of my socialization in the discipline of economics.

If my personal experience is relevant, it means that mere knowledge of the mechanisms determining happiness does not make it easier to re-make the norms instilled by the process of socialization -- to be specific, knowledge that economic growth is generating ever-rising subjective material needs does not itself make it possible to put a stop to the process.

The title of this talk posed the question "Where is Economic Growth Taking Us?" The answer, I believe, based on the evidence presented here, is, that while it is pleasant to contemplate a society freed for higher order pursuits, that is not where we are headed. Rather, the condition to which economic growth is leading us is, quite simply, growth everlasting.