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Education and Happiness: a Further Explanation to theEasterlin Paradox?

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CASTRIOTA STEFANO
Abstract

Previous empirical research has found a positive impact of education on happiness on regional and worldwide scale. In this paper I analyze the effect of absolute income on human happiness by education level. Using data from the World Bank’s World Value Survey on more than 118,000 individuals I find that the higher the education level is, the less relevant the absolute income level (GDP per capita measured in PPP constant 2000 international USD) for self-declared life-satisfaction. Higher income makes everybody happier but, everything else being equal, the marginal utility of additional income is higher for less educated people. This might partly explain the Easterlin paradox. Although the GDP level has been constantly rising from the end of World War II onwards, the average life-satisfaction in Western Europe and the United States has remained almost constant. Furthermore, average happiness levels in rich and poor countries are very similar. Since the average education level has risen a lot over time and is much higher in advanced countries, this might contribute to explain why higher absolute income level has not implied higher life-satisfaction across countries and over time.

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Paper provided by Tor Vergata University, CEIS in its series Departmental Working Papers with number 246.

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Date of creation: Dec 2006
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Handle: RePEc:rtv:ceiswp:246

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  21. Hartog, Joop & Oosterbeek, Hessel, 1998. "Health, wealth and happiness: why pursue a higher education?," Economics of Education Review, Elsevier, vol. 17(3), pages 245-256, June. [Downloadable!] (restricted)
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  1. Philip Oreopoulos & Kjell G. Salvanes, 2009. "How large are returns to schooling? Hint: Money isn't everything," NBER Working Papers 15339, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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