Growth and life satisfaction in the Euro zone

Thomas Wiese ()
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Thomas Wiese: Corvinus University of Budapest, Department of World Economy, Faculty of Economics and Business Administration, Budapest, Hungary

Acta Oeconomica, 2014, vol. 64, issue 4, 511-524

Abstract: Recent studies indicate a paradox: rising income has not led to increases in long-term levels of life satisfaction. Therefore, the hypothesis that citizens adapt to the growth of GDP is tested. This paper analyses empirically the relationship between a deviation in the trend of seasonally adjusted GDP growth and life satisfaction in Euro zone member countries based on data from the European Commission’s Eurobarometer report. This approach is new to the literature and it enables us to detect medium-term adaptation effects on growth rates. This adds a new way of tackling the question of why economic prosperity has had little or no influence on life satisfaction levels.We found that country-wide differences in the relationship of trend GDP growth and life satisfaction exist. Portugal, Italy, Greece, and Spain showed a significantly positive relationship. For other euro member countries, the hypothesis does not hold. This suggests that two different groups exist and if everything else is held constant, economic growth strategies should vary.

Keywords: happiness; growth; adaptation; Euro zone; life satisfaction (search for similar items in EconPapers)
JEL-codes: C22 D03 D60 D90 E50 I31 (search for similar items in EconPapers)
Date: 2014
Note: I am very grateful to the two anonymous referees for their useful comments. I want to thank József Gáll for his suggestions and guidance during the process, Nikoly Hristov for his inspiring ideas, and Balázs Hámori for his help.
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