The asymmetric effects of macroeconomic performance on happiness: Evidence for the EU

The analysis of data from the Eurobarometer obtains evidence of asymmetric effects of macroeconomic performance on happiness. The evidence reveals that, at least for the European countries in the sample, the effect of an economic recession on happiness can be at least twice the effect of economic growth on happiness. In short, economic recession can undo the gains on happiness from years of economic growth. Moreover, the evidence is about a short-run asymmetry; still, it supports the Easterlin paradox—that is, a finding of asymmetric effects of macroeconomic performance on happiness ultimately leads to a nil relationship between macroeconomic performance and happiness. The evidence points to stable rather than rapid economic growth as a more sensible target for policy because macroeconomic stability can lead more to conditions that allow the pursuit of happiness and thus secure the attainment of greater well-being.