Income, aspirations and subjective well-being: International evidence

Previous micro-level results from cross-sectional data from individual countries suggest that well-being brought about by higher income are at least partly offset by higher income aspirations. We conduct an encompassing analysis, covering about 30 countries at different stages of economic development. We use micro-data on Europeans’ subjective well-being, income and aspirations from the year 2013 and panel data on income and aspirations. Earlier findings on the negative association of aspirations and well-being are shown to hold internationally. As suggested by the earlier results from individual countries, aspirations matter systematically more in high-income countries. These results are robust to alternative well-being measures. However, the results also suggest that, despite aspirations, higher income improves life satisfaction even in high-income countries where aspirations totally offset emotional well-being and eudaimonia improvements. Further, the panel analysis shows that aspirations increase with incomes. Taken together, our results suggest that aspirations dampen income-induced well-being improvements, especially in high-income countries.