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

Betsey Stevenson () and Justin Wolfers ()

No 6944, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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: Easterlin Paradox; economic growth; happiness; hedonic treadmill; life satisfaction; quality of life; subjective well-being; well-being-income gradient (search for similar items in EconPapers)
JEL-codes: D6 I3 J1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hap
Date: 2008-08
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Journal Article: Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox (2008) Downloads
Working Paper: Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox (2008) Downloads
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