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Subjective Well-Being and Income: Is There Any Evidence of Satiation?

  • Betsey Stevenson
  • Justin Wolfers

Many scholars have argued that once "basic needs" have been met, higher income is no longer associated with higher in subjective well-being. We assess the validity of this claim in comparisons of both rich and poor countries, and also of rich and poor people within a country. Analyzing multiple datasets, multiple definitions of "basic needs" and multiple questions about well-being, we find no support for this claim. The relationship between well-being and income is roughly linear-log and does not diminish as incomes rise. If there is a satiation point, we are yet to reach it.

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File URL: https://cama.crawford.anu.edu.au/pdf/working-papers/2013/212013.pdf
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Paper provided by Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University in its series CAMA Working Papers with number 2013-21.

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Length: 26 pages
Date of creation: May 2013
Date of revision:
Handle: RePEc:een:camaaa:2013-21
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  1. Bruno S. Frey & Alois Stutzer, 2001. "What Can Economists Learn from Happiness Research?," CESifo Working Paper Series 503, CESifo Group Munich.
  2. Clark, Andrew E. & Frijters, Paul & Shields, Michael A., 2007. "Relative Income, Happiness and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," IZA Discussion Papers 2840, Institute for the Study of Labor (IZA).
  3. Sacks, Daniel W. & Stevenson, Betsey & Wolfers, Justin, 2013. "The New Stylized Facts About Income and Subjective Well-Being," CEPR Discussion Papers 9280, C.E.P.R. Discussion Papers.
  4. Oswald, Andrew J, 2008. "On the Curvature of the Reporting Function from Objective Reality to Subjective Feelings," The Warwick Economics Research Paper Series (TWERPS) 839, University of Warwick, Department of Economics.
  5. Rafael Di Tella & Robert MacCulloch, 2008. "Happiness Adaptation to Income beyond "Basic Needs"," NBER Working Papers 14539, National Bureau of Economic Research, Inc.
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