The Conflictive Relationship between Satisfaction and Income

Eduardo Lora and Juan Chaparro

No 4599, Research Department Publications from Inter-American Development Bank, Research Department

Abstract: This paper makes use of the 2006 Gallup World Survey, which includes opinions on satisfaction with various aspects of life in 130 countries. Although a very solid relationship is found between satisfaction and income (both across and within countries), raising doubts regarding the well-known Easterlin Paradox, a new paradox arises: “unhappy growth,” where faster growth rates are accompanied by lower levels of satisfaction. The losses of satisfaction associated with growth are more pronounced in the material domains of life and are greater in richer and more urban societies. At the individual level, although higher incomes tend to be reflected in greater satisfaction, an increase in the income of the social group to which an individual belongs has the opposite effect. The conflictive relationship between satisfaction and income has implications for political economy. In particular, it suggests a simple mechanism for explaining various characteristic traits of economic and social populism.

JEL-codes: D63 E61 I31 O21 (search for similar items in EconPapers)
Date: 2008-11
New Economics Papers: this item is included in nep-ltv
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Citations: View citations in EconPapers (8)

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Working Paper: The Conflictive Relationship between Satisfaction and Income (2008)
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