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Some individuals who are destitute report to be happy, while others who are very wealthy report to be miserable. There are many possible explanations for this paradox; this paper focuses on the role of adaptation. Adaptation is the subject of much work in economics, but its definition is a psychological one. Adaptations are defense mechanisms; there are bad ones like paranoia, and healthy ones like humor, anticipation, and sublimation. Set point theory--which is the subject of much debate in psychology--posits that people can adapt to anything, such as bad health, divorce, and extreme poverty, and return to a natural level of cheerfulness. My research from around the world, meanwhile, suggests that people are remarkably adaptable. Respondents in Afghanistan, for example, are as happy as Latin Americans and 20% more likely to smile in a day than Cubans. I posit that while this may be a good thing from an individual psychological perspective, it may also facilitate collective tolerance for bad equilibrium. I provide examples from the economics, democracy, crime, corruption and health arenas.
On Tuesday, January 12, 2010, The Center for Global Development and The Paul H. Nitze School of Advanced International Studies hosted a Massachusetts Avenue Development Seminar (MADS)* on Why Societies Stay Stuck in Bad Equilibrium:
Insights from Happiness Studies amidst Prosperity and Adversity featuring Carol Graham,Brookings Institution and University of Maryland, and author of Happiness Around the World: The paradox of happy peasants and miserable millionaires. John Williamson, of Peter G. Peterson Institute for International Economics, served as the discussant.
*The Massachusetts Avenue Development Seminar (MADS) series is an effort by the Center for Global Development and The Paul H Nitze School of Advanced International Studies to take advantage of the incredible concentration of great international development scholars in the Metro Washington, DC area. The series seeks to bring together members of this community and improve communication between them.
Industrialization was never an accident but an outcome of a well- crafted industrial policy. Analyzing the capacity and limits of the (developmental) state in the industrialization process and in economic development in general, Murat Yülek’s new book, How Nations Succeed: Manufacturing, Trade, Industrial Policy, and Economic Development, sheds light on how today’s governments can design industrial policy and how they can identify strategic sectors to break out of Low and Middle Income Traps. Explaining technical concepts in understandable terms, the book introduces a stylized industrialization process in four stages and locates different countries on the process map. He illustrates how picking-the-winner type industrial policies –a controversial issue among the economists –have worked in different countries. It also discusses how industrial policy and science, technology and innovation policies should be sequenced for best results. As trade wars and (pre-mature) de-industrialization become the zeitgeist of today, the book shows the links between global (im)balances and economic development explaining export-led growth as well as import-led slowdowns.
On the sidelines of the World Bank and IMF Spring Meetings 2019, the Center for Global Development (CGD) and the Bretton Woods Committee (BWC) will co-host this expert panel to discuss the future of the World Bank under its new president, David Malpass. What should top his agenda? What are the most important and urgent issues in the development landscape and what is the role of the World Bank in addressing these challenges? Join us to hear from this panel of global thought leaders offering recommendations for the future of the multilateral system.