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Subjective Well-Being, Income, Economic Development and Growth

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  • Sacks, Daniel W.
  • Stevenson, Betsey
  • Wolfers, Justin

Abstract

We explore the relationships between subjective well-being and income, as seen across individuals within a given country, between countries in a given year, and as a country grows through time. We show that richer individuals in a given country are more satisfied with their lives than are poorer individuals, and establish that this relationship is similar in most countries around the world. Turning to the relationship between countries, we show that average life satisfaction is higher in countries with greater GDP per capita. The magnitude of the satisfaction-income gradient is roughly the same whether we compare individuals or countries, suggesting that absolute income plays an important role in influencing well-being. Finally, studying changes in satisfaction over time, we find that as countries experience economic growth, their citizens’ life satisfaction typically grows, and that those countries experiencing more rapid economic growth also tend to experience more rapid growth in life satisfaction. These results together suggest that measured subjective well-being grows hand in hand with material living standards.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8048.

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Date of creation: Oct 2010
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Handle: RePEc:cpr:ceprdp:8048

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Related research

Keywords: development; Easterlin Paradox; economic growth; hedonic treadmill; life satisfaction; quality of life; Subjective well-being; well-being-income gradient;

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References

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  1. Luttmer, Erzo F. P., 2004. "Neighbors as Negatives: Relative Earnings and Well-Being," Working Paper Series rwp04-029, Harvard University, John F. Kennedy School of Government.
  2. Easterlin, Richard A., 2009. "Lost in transition: Life satisfaction on the road to capitalism," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 130-145, August.
  3. Betsey Stevenson & Justin Wolfers, 2009. "The paradox of declining female happiness," Working Paper Series 2009-11, Federal Reserve Bank of San Francisco.
  4. Angus Deaton, 2008. "Income, Health, and Well-Being around the World: Evidence from the Gallup World Poll," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 53-72, Spring.
  5. Betsey Stevenson & Justin Wolfers, 2008. "Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 1-102.
  6. Angus Deaton, 2010. "Price Indexes, Inequality, and the Measurement of World Poverty," American Economic Review, American Economic Association, vol. 100(1), pages 5-34, March.
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  1. Gross Domestic Problem
    by Diane Coyle in The Enlightened Economist on 2013-01-29 10:20:57
  2. Kan indkomst købe lykke?
    by ? in Carl-Johan Dalgaard on 2013-02-06 01:31:29
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