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Subjective well-being, income, economic development and growth

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  • Daniel W. Sacks
  • Betsey Stevenson
  • Justin Wolfers

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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Bibliographic Info

Paper provided by Federal Reserve Bank of San Francisco in its series Working Paper Series with number 2010-28.

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Date of creation: 2010
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Handle: RePEc:fip:fedfwp:2010-28

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Keywords: Well-being - Economic aspects;

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References

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  1. Stevenson, Betsey & Wolfers, Justin, 2009. "The Paradox of Declining Female Happiness," IZA Discussion Papers 4200, Institute for the Study of Labor (IZA).
  2. 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.
  3. repec:pri:cheawb:deaton_income_health_and_wellbeing_around_the_world_evidence_%20from_gallup_world_poll_jep_spring2008 is not listed on IDEAS
  4. 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.
  5. Erzo F. P. Luttmer, 2005. "Neighbors as Negatives: Relative Earnings and Well-Being," The Quarterly Journal of Economics, MIT Press, vol. 120(3), pages 963-1002, August.
  6. 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.
  7. Stevenson, Betsey & Wolfers, Justin, 2008. "Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox," IZA Discussion Papers 3654, Institute for the Study of Labor (IZA).
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Kan indkomst købe lykke?
    by ? in Carl-Johan Dalgaard on 2013-02-06 01:31:29
  2. Gross Domestic Problem
    by Diane Coyle in The Enlightened Economist on 2013-01-29 10:20:57
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Cited by:
  1. Duha T. Altindag & Junyue Xu, 2011. "The Impact of Institutions and Development on Happiness," Auburn Economics Working Paper Series auwp2011-08, Department of Economics, Auburn University.
  2. Erich Gundlach & Matthias Opfinger, 2011. "Religiosity as a determinant of happiness," GIGA Working Paper Series 163, GIGA German Institute of Global and Area Studies.
  3. Bert Van Landeghem, 2012. "Panel Conditioning and Self-Reported Satisfaction: Evidence from International Panel Data and Repeated Cross-Sections," SOEPpapers on Multidisciplinary Panel Data Research 484, DIW Berlin, The German Socio-Economic Panel (SOEP).
  4. Johannes Vatter, 2012. "Well-Being in Germany: What Explains the Regional Variation?," SOEPpapers on Multidisciplinary Panel Data Research 435, DIW Berlin, The German Socio-Economic Panel (SOEP).
  5. 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.
  6. SARRACINO Francesco, 2011. "Money, sociability and happiness : are developed countries doomed to social erosion and unhappiness?," CEPS/INSTEAD Working Paper Series 2011-02, CEPS/INSTEAD.
  7. Eiji Yamamura & Antonio Andrés & Marina Katsaiti, 2012. "Does Corruption Affect suicide? Econometric Evidence from OECD Countries," Atlantic Economic Journal, International Atlantic Economic Society, vol. 40(2), pages 133-145, June.
  8. Vatter, Johannes, 2012. "Well-being in Germany: What explains the regional variation?," FZG Discussion Papers 50, Research Center for Generational Contracts (FZG), University of Freiburg.
  9. Berlin, Martin & Kaunitz, Niklas, 2011. "Subjective Well-Being, Income and Economic Margins," Working Paper Series 12/2011, Swedish Institute for Social Research.
  10. SARRACINO Francesco, 2011. "Richer in money, poorer in relationship and unhappy? Time series comparisons of social capital and well-being in Luxembourg," CEPS/INSTEAD Working Paper Series 2011-01, CEPS/INSTEAD.
  11. Johannes Vatter, 2012. "Well-Being in Germany: GDP and Unemployment Still Matter," Working Paper Series of the German Council for Social and Economic Data 196, German Council for Social and Economic Data (RatSWD).
  12. Anna Dimitrova & Katarina Hollan & Daphne Laster & Andreas Reinstaller & Margit Schratzenstaller & Ewald Walterskirchen & Teresa Weiss, 2013. "Literature review on fundamental concepts and definitions, objectives and policy goals as well as instruments relevant for socio-ecological transition," WWWforEurope Working Papers series 40, WWWforEurope.
  13. BARTOLINI Stefano & SARRACINO Francesco, 2011. "Happy for How Long? How Social Capital and GDP relate to Happiness over Time," CEPS/INSTEAD Working Paper Series 2011-60, CEPS/INSTEAD.
  14. Yew-Kwang Ng, 2011. "Happiness Is Absolute, Universal, Ultimate, Unidimensional, Cardinally Measurable and Interpersonally Comparable: A Basis for the Environmentally Responsible Happy Nation Index," Monash Economics Working Papers 16-11, Monash University, Department of Economics.
  15. 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.
  16. BARTOLINI Stefano & MIKUCKA Malgorzata & SARRACINO Francesco, 2012. "Money, Trust and Happiness in Transition Countries: Evidence from Time Series," CEPS/INSTEAD Working Paper Series 2012-04, CEPS/INSTEAD.
  17. Hammond, Peter J. & Liberini, Federica & Proto, Eugenio, 2011. "Individual Welfare and Subjective Well-Being : Commentary Inspired by Sacks, Stevenson and Wolfers," The Warwick Economics Research Paper Series (TWERPS) 957, University of Warwick, Department of Economics.

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