The Relationship between Income and Happiness: an Economic Perspective

Empirical study shows that the economic growth and the increase of per capita income have not brought about the increase of people's happiness, which is contradict with traditional absolute income utility theorem. But the introduction of comparison income theory may make economic growth meaningless, while another theory attempts to introduce desire into utility function to solve the contradictory of income and happiness. If the aim of social policies is to realize the greatest happiness of the majority of the people, it is necessary for us to study how to increase people's happiness.