Bernanke: happiness is relative

Ben Bernanke, chairman of the Federal Reserve, set aside discussions on current events on Saturday to meditate on the economics of happiness to students at the University of South Carolina.

Bernanke differentiated between the concepts of short-term happiness and longer term life satisfaction, noting that the relationship between life satisfaction and happiness, and the factors contributing to each, is not always straightforward.

"When I was a kid, having a colour television was a major status symbol. Now, most households have colour TVs, often more than one. Your sense of how well off you are economically depends a great deal on your expectations and aspirations, which in turn are largely formed by the community in which you live," he said.

Bernanke discussed the Easterlin paradox named after economist Richard Easterlin who found that in contrast to the basic principles of economics, people in rich countries don't report much greater happiness than those in lower income countries.

Easterlin found that as countries get richer, beyond the level where basic needs such as food and shelter are met, people don't report being any happier

Bernanke warned students at the university that having a larger income is exciting at first, but as you get used to your new standard of living, and as you associate with other people in your new income bracket, the thrill quickly wears off.

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