Rescaling Hypothesis Challenges Easterlin Paradox, Suggesting US Happiness Has Doubled Since 1959

New research by economists Alberto Prati and Claudia Senik, published in 2025, introduces the "rescaling hypothesis," offering a significant reinterpretation of long-term happiness trends and potentially resolving the long-standing Easterlin Paradox. Their work suggests that the seemingly flat trajectory of reported happiness over decades may be a measurement artifact, as the subjective meaning of happiness survey scales shifts with rising living standards. The researchers propose that an "8" on a 0-10 happiness scale in 1990 is not equivalent to an "8" in 2020, because the perception of "the best life" (a 10) has evolved over time.

The Easterlin Paradox, first observed in the 1970s by Richard Easterlin, notes that while wealthier individuals and nations tend to report higher happiness at a given point in time, average happiness does not increase over the long term despite significant economic growth. Traditional explanations for this paradox include social comparison, where individuals' happiness is relative to their peers, and hedonic adaptation, where people quickly adjust to improved circumstances. This has led to a debate on whether economic progress truly contributes to collective well-being.

Prati and Senik address this by developing the "M-LINE" (Memory-corrected Life satisfaction Noetic Evaluation), a methodology that uses retrospective life evaluations to adjust for the shifting standards of happiness. Their core argument is that as societies progress, people's aspirations and benchmarks for a "good life" rise, causing them to rate their current satisfaction more stringently, even if their underlying well-being has objectively improved. By accounting for this "scale stretching" and "scale shifting," they aim to reveal a more accurate picture of latent happiness.

Applying their M-LINE methodology, Prati and Senik found that latent happiness in the United States substantially increased between 1959 and 2008, aligning more closely with gains in GDP and human development. This finding directly contradicts the flat trend implied by the Easterlin Paradox. Furthermore, their analysis revealed that during periods of collective crisis, such as the COVID-19 pandemic in Europe or the war in Ukraine, the actual decline in latent happiness was significantly deeper than indicated by nominal self-reported satisfaction.

This research suggests that the perceived stagnation of happiness in developed nations might largely be an illusion created by evolving subjective benchmarks rather than a genuine lack of progress in well-being. The findings underscore the importance of considering dynamic reporting standards when measuring subjective well-being and could reshape how policymakers evaluate the impact of economic and social advancements on population happiness.