Economist Robert H. Frank notes that Congress is finally considering alternatives to GDP as measurements of economic well-being:
This week, Senator Byron Dorgan . . . will hold a hearing exploring whether traditional economic measures like per-capita income accurately capture people’s sense of well-being.
[S]urvey findings [show] 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.
In the three decades after World War II, the relationship between well-being and income distribution was not a big issue, because incomes were growing at about the same rate for all income groups. Since the mid-1970s, however, income growth has been confined almost entirely to top earners. Changes in per-capita G.D.P., which track only changes in average income, are completely silent about the effects of this shift.
The chart above, from Lane Kenworthy’s blog Consider the Evidence, shows the trend graphically.