Individual Satisfaction and Economic Growth in an Agent-Based Economy

We combine macro and microeconomic perspectives in an agent-based endogenous growth model that uses individual satisfaction as a driver of human capital accumulation. The micro perspective is based on individual satisfaction: an utility function computed from the income variation in space (relative to others) and time. The macro perspective emerges from micro decisions that, at an aggregate level, determine an important social decision about the share of the working population engaged in producing ideas (i.e. skilled workers). Underlying our analysis is the Easterlin hypothesis (Easterlin, in: David, Melvin (eds) Nations and households in economic growth: essays in Honor of Moses Abramowitz, Academic Press, New York, 1974, J Econ Behav Organ 27(1):35–47, 1995) which states that individuals care much more about their relative income than about increases in their own income, weakening the link between growth and income. Simulations show that growth and satisfaction levels are higher when relative and absolute incomes are equally weighted in satisfaction computation and are lower when satisfaction only depends on relative incomes.