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Subjective Well-Being and Income: Is There Any Evidence of Satiation?

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  • Betsey Stevenson
  • Justin Wolfers

Abstract

Many scholars have argued that once "basic needs" have been met, further rises in income are not associated with further increases in subjective well-being. We assess the validity of this claim in comparisons of both rich and poor countries, and also of rich and poor people within a country. Analyzing multiple datasets, multiple definitions of "basic needs" and multiple questions about well-being, we find no support for this claim. The relationship between well-being and income is roughly log-linear and does not diminish as incomes rise. If there is a satiation point, we are yet to reach it.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 103 (2013)
Issue (Month): 3 (May)
Pages: 598-604

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Handle: RePEc:aea:aecrev:v:103:y:2013:i:3:p:598-604

Note: DOI: 10.1257/aer.103.3.598
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  1. Bruno S. Frey & Alois Stutzer, 2001. "What Can Economists Learn from Happiness Research?," CESifo Working Paper Series 503, CESifo Group Munich.
  2. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 95-144, March.
  3. Rafael Di Tella & Robert MacCulloch, 2008. "Happiness Adaptation to Income beyond "Basic Needs"," NBER Working Papers 14539, National Bureau of Economic Research, Inc.
  4. Oswald, Andrew J, 2008. "On the Curvature of the Reporting Function from Objective Reality to Subjective Feelings," The Warwick Economics Research Paper Series (TWERPS) 839, University of Warwick, Department of Economics.
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Cited by:
  1. Pablo Gluzmann, 2013. "Bienestar subjetivo y crecimiento económico: analizando la paradoja del crecimiento infeliz en la Encuesta Mundial Gallup," CEDLAS, Working Papers 0152, CEDLAS, Universidad Nacional de La Plata.
  2. Dorsett, Richard & Oswald, Andrew J, 2014. "Human Well-Being And In-Work Benefits: A Randomized Controlled Trial," The Warwick Economics Research Paper Series (TWERPS) 1038, University of Warwick, Department of Economics.
  3. Tamas Hajdu & Gabor Hajdu, 2013. "Are more equal societies happier? Subjective well-being, income inequality, and redistribution," IEHAS Discussion Papers 1320, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  4. Chrostek, Pawel, 2013. "An empirical investigation into the determinants and persistence of different types of subjective well-being," MPRA Paper 48292, University Library of Munich, Germany.
  5. Pritchett, Lant & Kenny, Charles, 2013. "Promoting Millennium Development Ideals: The Risks of Defining Development Down," Working Paper Series rwp13-033, Harvard University, John F. Kennedy School of Government.
  6. Chrostek, Pawel, 2013. "An empirical investigation into the determinants and persistence of happiness and life evaluation," MPRA Paper 50442, University Library of Munich, Germany.
  7. Strulik, Holger, 2013. "How status concerns can make us rich and happy," Center for European, Governance and Economic Development Research Discussion Papers 170, University of Goettingen, Department of Economics.
  8. Bruno Frey & Jana Gallus & Lasse Steiner, 2014. "Open issues in happiness research," International Review of Economics, Springer, vol. 61(2), pages 115-125, June.
  9. Beja Jr, Edsel, 2013. "Does economic prosperity bring about a happier society? Mathematical remarks on the Easterlin Paradox debate," MPRA Paper 48229, University Library of Munich, Germany.
  10. Lant Pritchett, Charles Kenny, 2013. "Promoting Millennium Development Ideals: The Risks of Defining Development Down-Working Paper 338," Working Papers 338, Center for Global Development.
  11. Beja Jr., Edsel, 2013. "Does economic prosperity bring about a happier society? Empirical remarks on the Easterlin Paradox debate," MPRA Paper 49446, University Library of Munich, Germany.
  12. Beja Jr., Edsel, 2013. "Does economic prosperity bring about a happier society? Empirical remarks on the Easterlin Paradox debate sans Happiness Adaptation," MPRA Paper 50633, University Library of Munich, Germany.
  13. Hajdu, Tamás & Hajdu, Gábor, 2014. "Reduction of income inequality and subjective well-being in Europe," Economics Discussion Papers 2014-22, Kiel Institute for the World Economy.
  14. repec:cge:warwcg:182 is not listed on IDEAS
  15. Powdthavee, Nattavudh & Stutzer, Alois, 2014. "Economic Approaches to Understanding Change in Happiness," IZA Discussion Papers 8131, Institute for the Study of Labor (IZA).
  16. James Fenske & Achyuta Adhvaryu & Anant Nyshadham, 2014. "Early Life Circumstance and Adult Mental Health," Economics Series Working Papers 698, University of Oxford, Department of Economics.

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