Growth, Development and Happiness                   2.15
             are still other general reasons to doubt            income19—after a certain point, the gains
             the formula of ever rising GNP per                  are very small. This means that poor
             person as the route to happiness. While             people benefit far more than rich people
             higher income may raise happiness to                from an added dollar of income. This is a
             some extent, the quest for higher income            good reason why tax-and-transfer systems
             may actually reduce one’s happiness.                among high-income OECD countries
             In other words, it may be nice to have              on balance take in net revenues from
             more money, but not so nice to crave for            high-income households and make net
             it. Psychologists have found repeatedly             transfers to low-income households. Put
             that individuals who put a high premium             another way, the inequality of household
             on higher incomes generally are less                income is systematically lower with net of
             happy and more vulnerable to other                  taxes and transfers than before taxes and
             psychological ills than individuals who do          transfers.20
             not crave higher incomes. Aristotle and       (x) The western economist’s logic of ever
             the Buddha advised humanity to follow               higher GNP is built on a vision of humanity
             a middle path between asceticism on the             completely at variance with the wisdom
             one side and craving material goods on              of the sages, the research of psychologists,
             the other.                                          and the practices of advertisers.
      (viii) Another problem is the creation of new              Economists assume that individuals are
             material ‘wants’ through the incessant              ‘rational decision-makers’ who know
             advertising of products using powerful              what they want and how to get it, or
             imagery and other means of persuasion.              to get as close to it as possible, given
             Since the imagery is ubiquitous on all              their budget. Individuals care largely
             of our digital devices, the stream of               about themselves and derive pleasure
             advertising is more relentless than ever            mainly through their consumption. The
             before. Advertising is now a business of            individual’s preferences as consumers
             around US $500 billion per year. Its goal           are a given or change in ways actually
             is to overcome satiety by creating wants            anticipated in advance by the individuals
             and longings where none previously                  themselves. Some economists even say
             existed. Advertisers and marketers do               that drug addicts have acted ‘rationally’,
             this in part by preying on psychological
                                                         19.  Suppose that a poor household at Rs. 1,000 income
             weaknesses and unconscious urges.                requires an extra Rs. 100 to raise its life satisfaction
             Cigarettes, caffeine, sugar, and trans-          level (or happiness) by one notch. A rich household at
             fats, all cause cravings if not outright         Rs. 1,000,000 income (one thousand times as much as
                                                              the poor household) would need one thousand times
             addictions. Fashions are sold through            more money, or Rs. 100,000, to raise its well-being
             increasingly explicit sexual imagery.            by the same one notch. Gains in income have to be of
             Product lines are generally sold by              equal proportions to household income to have the same
                                                                enefit in units of life satisfaction.
             associating the products with high social
                                                         20.  On an average across, the OECD countries, cash
             status rather than with real needs.              transfers and income taxes reduce inequality by one
       (ix) The thinking of becoming happier by               third. Poverty is around 60 per cent lower than it
                                                              would e without taxes and enefits. ven among the
             becoming richer is challenged by the             working-age population, government redistribution
             law of diminishing marginal utility of           reduces poverty by about 50 per cent (OECD, 2008).