Pareto bites the dust

There is an absolutely fascinating article in the current LRB about happiness and the hedonic treadmill. Briefly (and sadly you will have to buy the magazine as the full article is only online for LRB subscribers) it appears that Avner Offer has shown, at least to the reviewer's satisfaction, that growing GDP beyond a certain point leads to decreasing happiness. Extra income is not Pareto optimal. Now if this Easterlin paradox is really true (and what is new about Offer's book is apparently the wealth of detailed econometric evidence), this does pose some interesting challenges about what to do about it.