Income, Aspirations and Subjective Well-being: International Evidence

Matti Hovi and Jani-Petri Laamanen

No 2029, Working Papers from Tampere University, Faculty of Management and Business, Economics

Abstract: Previous micro-level results from cross-sectional data from individual countries sug- gest that well-being improvements related to rising incomes are at least partly offset by associated rises in income aspirations. We conduct a more encompassing analysis on the topic, covering about 30 countries in different stage of economic development. We use micro-data on Europeans’ subjective well-being, income and aspirations as measured by minimum income needs from the year 2013 and panel data on income and aspirations. Earlier findings on the negative role of income aspirations when it comes to well-being are shown to hold internationally. Moreover, in line with the earlier results from individual countries, we find that aspirations matter systematically more, the higher the country’s average income. These results are robust to three different measures of well-being. Fur- ther, the panel analysis shows that aspirations increase with incomes. Taken together, our results suggest that aspirations play an important role in holding back income-induced well-being improvements, especially in high-income countries.

Keywords: Income; Subjective well-being; Aspirations (search for similar items in EconPapers)
JEL-codes: D60 D63 I31 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2020-05
New Economics Papers: this item is included in nep-eur and nep-hap
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http://urn.fi/URN:ISBN:978-952-03-1595-5 First version, 2020 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:tam:wpaper:2029

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