In recent years, economy is developing in a very fast speed. People get richer and richer. But the truth is gaining money doesn’t mean gaining happiness. More and more people feel that they are not as happy as they feel to be. Some of the economic theories can explain this situation.
As economy develops, citizen’s income increases which means they can buy more goods than before because can be willing for and be able to. When people’s income is not high enough, they are not able to buy many goods. For instance, a person may only but one bottle of cola when he was poor, but the utility he got from this bottle of cola is very high. If his income rises, he may but 10 bottles of cola, but the utilities he gets from the 2nd bottle, the 3rd bottle and the 10th bottle are not the same as the first one. The phenomenon is called diminishing marginal utility. Utility is the satisfaction people get from doing something. Marginal utility is the addition utility derived from the consumption of one more unit of a particular good. Diminishing marginal utility means that the marginal utility gained from the consumption of a product tend to fall as consumption increases.
So, as economy develops, people’s income rises. The ability of consumption by consumers increases. People but more products and more mount of products which will cause diminishing marginal utility. That can explain the reason why people have less happiness than before.
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