Making economic growth and well-being compatible: the role of trust and income inequality

Malgorzata Mikucka and Francesco Sarracino

MPRA Paper from University Library of Munich, Germany

Abstract: To what extent is economic growth liable to improve people’s subjective well-being in the long run? Recent studies identified three possible answers: economic growth matters a great deal; economic growth does not matter at all; economic growth matters, but other things matter more. Each of these conclusions has different policy implications to promote people’s well-being. Despite the progress of social science research, the disagreement persists for at least two reasons: first, current policy conclusions hinge on weak methodological grounds; second, the literature missed to identify the conditions shaping the relationship between economic growth and well-being. Our paper addresses these issues overcoming some of the methodological shortcomings of previous literature. Additionally, we test the hypotheses that economic growth has a positive effect on subjective well-being in presence of increasing social trust and decreasing income inequality. To this aim we use multilevel regression analysis and the integrated World Values Survey - European Values Study data-set. We confirm previous evidence showing that in the long run economic growth does not increase people’s well-being. We also document that decreasing income inequality and non decreasing social trust allow a long-term positive relationship between economic growth and subjective well-being.

Keywords: economic growth; subjective well-being; social trust; income inequality; Easterlin paradox; sustainability (search for similar items in EconPapers)
JEL-codes: D60 I0 I1 I31 (search for similar items in EconPapers)
Date: 2014-11-04
New Economics Papers: this item is included in nep-fdg, nep-gro, nep-hap, nep-hpe, nep-pbe and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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