Home > Uncategorized > The Coca-Cola theory of happiness

The Coca-Cola theory of happiness

from Asad Zaman

The root cause of our hopelessly defective economic theories is a fundamentally misguided model of human behavior. Modern economic theory assesses the impact of policies by replacing all human beings with homo economicus, which is a brain connected to a mouth and stomach. Because the heart and soul of human beings is removed from the picture before the economist begins his calculations, economists are routinely baffled by behavioral economics, based on actual behavior instead of hypothesis. Topping this deep ignorance is an amazing arrogance about “microeconomic foundations” — that even if macro is wrong, at least our micro theories rest on solid foundations! Such assertions leave me speechless; what can you say to someone who confidently claims to be Napoleon Bonaparte ?

Because of complete failure to understand human beings, economists subscribe to a ridiculous theory of human welfare — it is monotonic in consumption. All of us act as if our sole purpose in life is to maximize the utility obtained from consumption. Economists have never heard of the Buddha who taught that the root of suffering is attachment to material pleasures obtained from consumption. Yet the illusion that increasing consumption leads to increasing welfare has been clearly exposed by Easterlin. Economists continue to struggle to counter and explain away the Easterlin Paradox, since it contradicts their firm belief in the “Coca-Cola theory of happiness”. This is briefly described below, in an excerpt from my previous post on “The Search for Knowledge” :  read more

  1. March 29, 2018 at 4:15 pm

    So how would you measure progress if you don’t accept GDP growth rate as evidence? (Or am I drawing the wrong conclusion?)

    • March 29, 2018 at 4:52 pm

      Ok, I might have found part of the answer to my own question in a linked reference:

      “For example, use of GNP per capita as a yardstick of social welfare exactly fits this description, since gains to the top 1% are first divided over the entire population and then measured, thus appearing to be generally beneficial, when in fact they are not. Overcoming this deception will involve replacing ET1% by ET90% — a new economic theory for the bottom 90%.”

      I could see value in this regardless of it’s theoretical underpinnings.

  2. Nick
    March 29, 2018 at 6:23 pm

    Sorry fell at the first hurdle…

    “The root cause of our hopelessly defective economic theories is a fundamentally misguided model of human behavior.”

    no no no my dear Assad,

    money and power are the root cause of our hopelessly defective economic theories xxx

    (will now read rest of article)

  3. March 30, 2018 at 6:16 am

    Take a look here, http://worldhappiness.report/ed/2018/ These results present a different view of the welfare of the world and nations.

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