Income and happiness: Evidence, explanations and economic implications
There is now a great deal of micro-econometric evidence, both cross-section and panel, showing that income is positively correlated with well-being. Yet the famous Easterlin paradox shows essentially no change in average happiness at the country level, despite spectacular rises in per capita GDP. We argue that survey well-being questions are indeed good proxy measures of utility, and resolve the Easterlin paradox by appealing to income comparisons: these can be to others (social comparisons) or to oneself in the past (habituation). We review a substantial amount of econometric, experimental and neurological literature consistent with comparisons, and then spell out the implications for a wide range of economic issues.
|Date of creation:||Sep 2006|
|Date of revision:|
|Note:||View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00590436|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Andrew E. Clark, 2016.
"Happiness, Habits and High Rank: Comparisons in Economic and Social Life,"
- Andrew E. Clark, 2012. "Happiness, Habits and High Rank: Comparisons in Economic and Social Life," SOEPpapers on Multidisciplinary Panel Data Research 452, DIW Berlin, The German Socio-Economic Panel (SOEP).
- Andrew E. Clark, 2008. "Happiness, habits and high rank: Comparisons in economic and social life," PSE Working Papers halshs-00586049, HAL.
- Clark, Andrew E., 2011. "Happiness, Habits and High Rank: Comparisons in Economic and Social Life," IZA Discussion Papers 5966, Institute for the Study of Labor (IZA).
- DiTella, Rafael & MacCulloch, Robert & Oswald, Andrew J., 2001.
"Preferences over inflation and unemployment: Evidence from surveys of happiness,"
ZEI Working Papers
B 03-2001, University of Bonn, ZEI - Center for European Integration Studies.
- Robert J. MacCulloch & Rafael Di Tella & Andrew J. Oswald, 2001. "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness," American Economic Review, American Economic Association, vol. 91(1), pages 335-341, March.
- Ada Ferrer-i-Carbonell & Paul Frijters, 2004.
"How Important is Methodology for the estimates of the determinants of Happiness?,"
Royal Economic Society, vol. 114(497), pages 641-659, 07.
- Ada Ferrer-i-Carbonell & Paul Frijters, 2002. "How important is Methodology for the Estimates of the Determinants of Happiness?," Tinbergen Institute Discussion Papers 02-024/3, Tinbergen Institute.
- Rafael Di Tella & Robert J. MacCulloch & Andrew J. Oswald, 2003.
"The Macroeconomics of Happiness,"
The Review of Economics and Statistics,
MIT Press, vol. 85(4), pages 809-827, November.
- DiTella, Rafael & MacCulloch, Robert & Oswald, Andrew J., 1999. "The macroeconomics of happiness," ZEI Working Papers B 03-1999, University of Bonn, ZEI - Center for European Integration Studies.
- Di Tella, Rafael & MacCulloch, Robert J. & Oswald, Andrew J., 2001. "The Macroeconomics of Happiness," The Warwick Economics Research Paper Series (TWERPS) 615, University of Warwick, Department of Economics.
- Di Tella, R. & MacCulloch, R.J.: Oswald, A.J., 1997. "The Macroeconomics of Happiness," Papers 19, Centre for Economic Performance & Institute of Economics.
- Bernard M.S. van Praag & Paul Frijters, 1999. "The measurement of welfare and well-being; the Leyden approach," School of Economics and Finance Discussion Papers and Working Papers Series 071a, School of Economics and Finance, Queensland University of Technology.
- van Praag, Bernard M. S., 1991. "Ordinal and cardinal utility : An integration of the two dimensions of the welfare concept," Journal of Econometrics, Elsevier, vol. 50(1-2), pages 69-89, October.
- Louis Lévy-Garboua & Claude Montmarquette, 1997.
"Reported Job Satisfaction: What Does It Mean?,"
CIRANO Working Papers
- Levy-Garboua, Louis & Montmarquette, Claude, 2004. "Reported job satisfaction: what does it mean?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 33(2), pages 135-151, April.
- Louis Lévy-Garboua & Claude Montmarquette, 2004. "Reported job satisfaction : What does it mean?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00203197, HAL.
- LEVY-GARBOUA, Louis & MONTMARQUETTE, Claude, 1997. "Reported Job Satisfaction : What Does It Mean?," Cahiers de recherche 9705, Universite de Montreal, Departement de sciences economiques.
- Olof Johansson-Stenman & Fredrik Carlsson & Dinky Daruvala, 2002. "Measuring Future Grandparents" Preferences for Equality and Relative Standing," Economic Journal, Royal Economic Society, vol. 112(479), pages 362-383, April.
When requesting a correction, please mention this item's handle: RePEc:hal:psewpa:halshs-00590436. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD)
If references are entirely missing, you can add them using this form.