Vibecession or Degrowth? Why Wealth Is Rising but American Happiness Isn’t

Americans are wealthier than at any time in history, yet a growing share reports not feeling very happy, a tension that has intensified public and scholarly scrutiny of the link between money and well-being. Inflation-adjusted median household income in the United States has risen about 26 percent since 1996, a gain that has allowed more people to afford flights, smartphones and other comforts. At the same time, surveys show a widening gap between rising material living standards and mood. The General Social Survey data cited in recent analyses show the share of Americans who describe themselves as “not too happy” climbing by roughly nine percentage points over the period, while the segment calling themselves “very happy” fell by more than nine points. By 2025, Gallup’s polling reported an all-time low in the share of Americans who are “very satisfied” with their personal lives. These trends have drawn attention to what researchers have termed a vibecession—the idea that rising prosperity coexists with stagnant or even falling happiness in wealthy democracies.

Since mid-2023, inflation cooled from the post-pandemic spike, and many households saw real wages and net worth rise again. Yet the public mood did not accompany that financial strengthening. Pundits labeled the phenomenon a vibecession and offered a range of explanations—from lingering inflation psychology and housing unaffordability to the social costs of isolation and the omnipresence of digital screens. Some observers view the vibecession not as a transitory oddity but as a default condition of advanced economies, where long-run growth has not reliably translated into higher life satisfaction for many people.

Against this backdrop, a strand of environmental and political thought argues that growth can and should be reined in without sacrificing welfare, a position associated with the degrowth movement. Proponents such as philosopher Tim Jackson and anthropologist Jason Hickel contend that the wealthy world has been locked in a zero-sum race of competitive consumption. They argue that reducing material throughput while redirecting attention to egalitarian governance, leisure, health care, education and clean energy could improve well-being even as economies contract in resource use. If wealthier nations could abandon the obsession with status-driven consumption, they claim, living standards could rise in nonmaterial terms even with a smaller overall economy.

The appeal of degrowth is intuitive in a world where growth sometimes appears to drift away from the very things people value most: health, time with loved ones, community, and a sense of purpose. The argument rests on two related ideas. First, that the relationship between income and happiness weakens as societies become richer, with relative status—the gap between what people have and what others have—playing a large role in day-to-day contentment. Second, that the planet’s ecological limits imply a need to shrink material throughput, particularly in energy- and resource-intensive sectors, if future well-being is to be safeguarded for the long haul. In Jackson’s frame, healthier, more egalitarian economies would emphasize what people actually need to live well—quality health care, education, housing, clean energy, and meaningful work—while curbing assets and services that primarily serve competitive consumption.

But the degrowth thesis faces significant challenges when translated into policy or national strategy. Critics point out that some sectors most associated with well-being—health care, medical technology and energy systems—depend on large-scale production, complex supply chains, and broad consumer markets. A central counterargument is that trying to contract indispensable sectors, such as health care or energy infrastructure, could undermine welfare and even public health. The debate becomes concrete when examining how, in practice, growth supports innovation. For example, the same markets that fostered rapid advances in semiconductors and lithium-ion batteries—driven in part by consumer electronics demand—have underpinned the tools necessary for modern medicine and green energy. Hospitals rely on imaging devices powered by chips; modern dialysis requires extensive energy and water infrastructure; and the broader ecosystem that supports medical innovation is deeply intertwined with consumer devices and mass-market demand.

Even if one accepts that well-being can improve with changes in what economies produce, the scale and speed of a dramatic contraction in consumer markets pose technical and logistical questions. Hickel’s proposal to shrink material use by 75 percent—while preserving or expanding essential services like health care—strains credulity when one considers the inputs required for medical technology, electronic devices, transportation, and the energy grid. The argument also risks underestimating how integral widespread markets are to sustaining complex, supply-chain-dependent innovations. The reality is that many modern miracles of health and energy depend on robust, diversified demand across consumer and industrial sectors alike.

A broader, more tempered view acknowledges that growth and happiness are not perfectly aligned, but that the path to improved well-being in rich democracies likely involves rethinking priorities rather than shrinking the economy. The evidence suggests that happiness and life satisfaction can respond to changes in income and security, but the magnitude and direction of that response are nuanced. Some studies indicate that absolute income matters for basic welfare—food, shelter, health care—while relative status shapes more discretionary preferences and consumption choices. A 2023 study from the University of California Riverside analyzed repeated surveys of the same Americans and found that people tended to report higher happiness when their income rose relative to their peers, even if their absolute income changed little. Conversely, income gains that did not improve relative standing offered modest or no happiness gains. In other words, the psychology of status can dampen the happiness payoff from broad income growth.

The potential policy response, therefore, may lie in aligning economic growth with avenues that demonstrably bolster well-being, rather than pursuing growth for its own sake. Some experts argue for policies that expand leisure time and social connectedness without sacrificing living standards. Paid vacation days, as observed in many European nations, are cited as one lever to reduce stress, combat isolation and improve mental health while maintaining productivity and output. Others point to investment in health, education, affordable housing and clean energy—areas that can meaningfully lower suffering and expand opportunities without requiring a wholesale reduction in GDP. In this view, the goal is not less growth but better growth—growth that prioritizes health, resilience and communal well-being alongside innovation and wealth creation.

Nonetheless, the literature remains unsettled on how best to navigate the trade-offs between growth, well-being, and ecological limits. Some economists argue that modest, sustained growth can coexist with rising happiness in many contexts, while others caution that the relationship may weaken as incomes rise. Still others warn that survey-based measures of happiness are themselves fluid, influenced by cultural norms and evolving concepts of psychological well-being. Even if happiness does not move in lockstep with income, the practical question remains: how to design a policy mix that preserves essential services, supports innovation, and enhances people’s daily lives without blindly pursuing higher consumption for its own sake.

In the end, the debate centers on what an economy should be for. If the aim is to maximize immediate consumption, then the appeal of degrowth is clear to some environmental thinkers. If the aim is to maximize long-run welfare, then planners may focus on channeling growth toward health, education, clean energy and social connection—areas that improve resilience and life satisfaction in tangible ways while keeping living standards high. What is certain is that the relationship between money and happiness in the United States is more complex than a simple arithmetic of growth. The data suggest that a larger economy does not automatically deliver greater happiness, but it also does not prove that a smaller one would do so either. The optimal path likely lies somewhere in between: a broader, more intentional prioritization of the goods and services that truly sustain well-being, guided by evidence about how people actually feel and what they value.

This framing matters for policymakers, businesses and investors who weigh the future of American growth, consumption patterns, and social outcomes. If the objective is to sustain prosperity while improving happiness, the emphasis may shift from chasing purely larger GDP figures to cultivating a more holistic approach to living standards—one that emphasizes health, community, time, security and sustainable energy as much as, if not more than, new gadgets and bigger homes. In that sense, the story of wealth and well-being is less a simple equation of inputs and outputs and more a question of what kind of prosperity a society chooses to pursue—and how it chooses to measure success along the way.