Structural changes in economic growth and well-being. The case of Italy's parabola
Maurizio Pugno () and
MPRA Paper from University Library of Munich, Germany
The controversies on the relationship (or `gradient') between GDP and subjective well-being oppose those who claim that the gradient is positive and stable around the world to those who argue that long-run trends of subjective well-being are flat despite economic growth. The possible existence of structural breaks of the gradient within the same country is a challenge to both views. By focusing on the case of Italy, we show that the long-run trends of GDP and of well-being turned from increasing to decreasing, and the gradient exhibits a rise through two structural breaks. Macro and micro analyses explain why the gradient changes, and we find evidence consistent with the `loss aversion' hypothesis. In addition, the gradient changed because the erosion of trust in others, the increase of financial dissatisfaction and worsened health hinder well-being independently from income.
Keywords: structural breaks; subjective well-being; economic growth; Easterlin paradox; trends; loss aversion (search for similar items in EconPapers)
JEL-codes: D6 I31 O11 O12 (search for similar items in EconPapers)
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