Grading happiness: what grading systems tell us about cross-country wellbeing comparisons

Self-reported wellbeing measures have been widely used in cross-country studies. However, there are concerns about the sensitivity of these measures to country-specific factors that affect the interpretation of questions and scales without affecting wellbeing itself. Using a novel database on international grading systems, we find evidence that differences in numerical grading systems affect self-reported wellbeing. In particular, countries with a higher threshold for passing grades tend to report higher levels of life satisfaction. Since grading systems are unlikely to affect wellbeing itself, we conclude that grading systems affect the interpretation of scales--probably by providing reference points that anchor individuals' responses.