Happiness, income and poverty

Andrew Clark

International Review of Economics, 2017, vol. 64, issue 2, No 4, 145-158

Abstract: Abstract There is considerable evidence from a variety of sources to suggest that well-being is a function of relative income. These findings have been used to explain the Easterlin Paradox, whereby a rise in income for all does not lead to a rise in average happiness in a country (even though the cross section relationship between income and happiness is positive). This relativity of utility has led to calls for policy to focus away from GDP. I here first discuss some of the evidence that well-being is indeed relative in income, but then consider two relatively little-analysed issues to suggest that there may continue to be a role for GDP per capita in happiness-based policy: the inequality of subjective well-being, and the specific case of those in income poverty.

Keywords: Happiness; Income; Inequality; Poverty (search for similar items in EconPapers)
JEL-codes: D31 I31 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s12232-017-0274-7

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