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Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox

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  • Betsey Stevenson

    (University of Pennsylvania)

  • Justin Wolfers

    (University of Pennsylvania)

Abstract

The "Easterlin paradox" suggests that there is no link between a society’s economic development and its average level of happiness. We re-assess this paradox analyzing multiple rich datasets spanning many decades. Using recent data on a broader array of countries, we establish a clear positive link between average levels of subjective well-being and GDP per capita across countries, and find no evidence of a satiation point beyond which wealthier countries have no further increases in subjective well-being. We show that the estimated relationship is consistent across many datasets and is similar to the relationship between subject well-being and income observed within countries. Finally, examining the relationship between changes in subjective well-being and income over time within countries we find economic growth associated with rising happiness. Together these findings indicate a clear role for absolute income and a more limited role for relative income comparisons in determining happiness.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • 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.
  • Handle: RePEc:bin:bpeajo:v:39:y:2008:i:2008-01:p:1-102
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    References listed on IDEAS

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    More about this item

    Keywords

    economic growth; macroeconomics; Easterlin Paradox; GDP; happiness; countries;
    All these keywords.

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J1 - Labor and Demographic Economics - - Demographic Economics

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    1. Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox (BPEA 2008) in ReplicationWiki

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