The New Stylized Facts about Income and Subjective Well-Being
AbstractIn recent decades economists have turned their attention to data that asks people how happy or satisfied they are with their lives. Much of the early research concluded that the role of income in determining well-being was limited, and that only income relative to others was related to well-being. In this paper, we review the evidence to assess the importance of absolute and relative income in determining well-being. Our research suggests that absolute income plays a major role in determining well-being and that national comparisons offer little evidence to support theories of relative income. We find that well-being rises with income, whether we compare people in a single country and year, whether we look across countries, or whether we look at economic growth for a given country. Through these comparisons we show that richer people report higher well-being than poorer people; that people in richer countries, on average, experience greater well-being than people in poorer countries; and that economic growth and growth in well-being are clearly related. Moreover, the data show no evidence for a satiation point above which income and well-being are no longer related.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7105.
Length: 17 pages
Date of creation: Dec 2012
Date of revision:
Publication status: published in: Emotion, 2012, 12(6), 1181-1187 (lead article)
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Other versions of this item:
- Justin Wolfers & Daniel W. Sacks & Betsey Stevenson, 2013. "The New Stylized Facts About Income and Subjective Well-Being," CAMA Working Papers 2013-03, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- Daniel W. Sacks & Betsey Stevenson & Justin Wolfers, 2013. "The New Stylized Facts about Income and Subjective Well-Being," CESifo Working Paper Series 4067, CESifo Group Munich.
- Sacks, Daniel W. & Stevenson, Betsey & Wolfers, Justin, 2013. "The New Stylized Facts About Income and Subjective Well-Being," CEPR Discussion Papers 9280, C.E.P.R. Discussion Papers.
- D6 - Microeconomics - - Welfare Economics
- I3 - Health, Education, and Welfare - - Welfare and Poverty
- J1 - Labor and Demographic Economics - - Demographic Economics
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-03 (All new papers)
- NEP-EVO-2013-02-03 (Evolutionary Economics)
- NEP-LTV-2013-02-03 (Unemployment, Inequality & Poverty)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Easterlin, Richard A., 1995. "Will raising the incomes of all increase the happiness of all?," Journal of Economic Behavior & Organization, Elsevier, vol. 27(1), pages 35-47, June.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- The New Stylized Facts about Income and Subjective Well-Being
by maximorossi in NEP-LTV blog on 2013-02-27 12:59:25
- Links and Notes from April 17th Whitaker Institute Talk on Well-Being
by Liam Delaney in Economics and Psychology Research on 2013-05-03 19:32:00
- The New Stylized Facts About Income and Subjective Well-Being
by maximorossi in NEP-LTV blog on 2013-03-04 12:45:56
- 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.
- 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.
- Tobias Pfaff & Johannes Hirata, 2013. "Testing the Easterlin Hypothesis with Panel Data: The Dynamic Relationship between Life Satisfaction and Economic Growth in Germany and the UK," SOEPpapers on Multidisciplinary Panel Data Research 554, DIW Berlin, The German Socio-Economic Panel (SOEP).
- Bodo Knoll & Hans Pitlik & Martin Rode, 2013. "Economic Freedom, Money and Happiness – Why Deregulation Matters Beyond its Wealth Enhancing Effect," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 11(2), pages 35-42, 07.
- Pfaff, Tobias & Hirata, Johannes, 2013. "Testing the Easterlin hypothesis with panel data: The dynamic relationship between life satisfaction and economic growth in Germany and in the UK," CIW Discussion Papers 4/2013, University of Münster, Center for Interdisciplinary Economics (CIW).
- 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.
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