Does growth cause happiness, or does happiness cause growth?

Although there are many accepted faults with GNP per capita as a measure of the utility gained from wealth, most commentators would still argue that an increase in GNP per capita will have positive effects on total utility outweighing any negative externalities. Taking lessons from a conception of the nature and causes of happiness that harks back to Adam Smith and the original Utilitarians, this paper argues that increases in absolute income should have little effect on happiness in rich countries, and that there might instead be channels linking happiness causally with growth. Using time series evidence from happiness polls in ten wealthy countries, the paper finds no support for a causal link from growth to happiness, weak support for a reverse causation and further (weak) support for links between national equality and happiness and leisure time and happiness. The paper concludes by offering some consequences of this for theory and policy.