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Econometric Evidence for Satiation of Subjective Well‐Being With Income at the Aggregate Level in Europe

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  • Simon Röck
  • Gottfried Tappeiner
  • Janette Walde

Abstract

The Easterlin paradox explores the link between subjective well‐being (SWB) and income, questioning if a saturation point exists where more income no longer boosts SWB. In the literature, the studies dealing with a saturation point of SWB at the cross‐sectional level are ambiguous. The results of this study provide evidence for its existence. The EU‐SILC data are used to test for satiation by means of kink regressions and generalized additive models. The unique feature of the EU‐SILC dataset is the availability of the annual equalized disposable household income (EDHI) after taxes and deductions, taking into account social transfers. At least for European countries, life satisfaction and happiness, two facets of SWB, show no further increase above 30,000 € net annual income (EDHI) both in 2013 and 2018. Only a few countries have crossed the threshold and reached satiation. This results in different policy approaches. For European countries not at satiation, economic development might be prioritized to close the income gap. For European countries in satiation, priority should be given to looking beyond income growth to further improve SWB.

Suggested Citation

  • Simon Röck & Gottfried Tappeiner & Janette Walde, 2026. "Econometric Evidence for Satiation of Subjective Well‐Being With Income at the Aggregate Level in Europe," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 41(1), pages 56-76, January.
    • Handle: RePEc:wly:japmet:v:41:y:2026:i:1:p:56-76
    DOI: 10.1002/jae.70013
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