But there is a much bigger problem, one that challenges the very foundation of the presumed link between per-capita G.D.P. and economic welfare. That’s the assumption, traditional in economic models, that absolute income levels are the primary determinant of individual well-being.
This assumption is contradicted by consistent survey findings that when everyone’s income grows at about the same rate, average levels of happiness remain the same. Yet at any given moment, the pattern is that wealthy people are happier, on average, than poor people. Together, these findings suggest that relative income is a much better predictor of well-being than absolute income.
That we are so concerned with our relative status - that our happiness seems to depend more on how much (or little) we feel we are getting ahead than on how well off we are - suggests we have still not shaken loose of the attitudes that Keynes describes in his 1930 essay "Economic Possibilities For Our Grandchildren." He believed that a set of values that encouraged accumulation of wealth for its own sake was an important ingredient in promoting the increase of capital required for economic growth. However, continued growth would ultimately liberate future generations from the "economic problem" of scarcity and allow humanity to live "wisely, agreeably and well" by a nobler set of principles. But, Keynes warned, the transition would be difficult:
The strenuous purposeful money‑makers may carry all of us along with them into the lap of economic abundance. But it will be those peoples, who can keep alive, and cultivate into a fuller perfection, the art of life itself and do not sell themselves for the means of life, who will be able to enjoy the abundance when it comes.
Yet there is no country and no people, I think, who can look forward to the age of leisure and of abundance without a dread. For we have been trained too long to strive and not to enjoy...