Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox

Betsey Stevenson and Justin Wolfers

No 3654, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The “Easterlin paradox” suggests that there is no link between a society’s economic development and its average level of happiness. We re-assess this paradox analyzing multiple rich datasets spanning many decades. Using recent data on a broader array of countries, we establish a clear positive link between average levels of subjective well-being and GDP per capita across countries, and find no evidence of a satiation point beyond which wealthier countries have no further increases in subjective well-being. We show that the estimated relationship is consistent across many datasets and is similar to the relationship between subject well-being and income observed within countries. Finally, examining the relationship between changes in subjective well-being and income over time within countries we find economic growth associated with rising happiness. Together these findings indicate a clear role for absolute income and a more limited role for relative income comparisons in determining happiness.

Keywords: subjective well-being; Easterlin Paradox; life satisfaction; economic growth; well-being-income gradient; happiness; hedonic treadmill (search for similar items in EconPapers)
JEL-codes: D6 I3 J1 (search for similar items in EconPapers)
Pages: 80 pages
Date: 2008-08
New Economics Papers: this item is included in nep-hap
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Citations: View citations in EconPapers (699)

Published - published in: Brookings Papers on Economic Activity, 2008, 1, 1-87

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Related works:
Journal Article: Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox (2008)
Working Paper: Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox (2008)
Working Paper: Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox (2008)
Working Paper: Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox (2008)
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