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The Conflictive Relationship between Satisfaction and Income

  • Eduardo Lora
  • Juan Camilo Chaparro

Using the 2006 Gallup World Survey of life satisfaction in 130 countries, this paper finds a very solid relationship between satisfaction and income (both across and within countries) and uncovers the unhappy growth paradox, whereby faster growth rates are accompanied by lower levels of satisfaction. The losses of satisfaction associated with growth are more pronounced in the material domains of life and are greater in richer and more urban societies. At the individual level, although higher incomes tend to be reflected in greater satisfaction, an increase in the income of the social group to which an individual belongs has the opposite effect. The conflictive relationship between satisfaction and income has implications for political economy and may help explain various characteristics of economic and social populism.

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Paper provided by Inter-American Development Bank in its series IDB Publications (Working Papers) with number 6752.

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Date of creation: Nov 2008
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Handle: RePEc:idb:brikps:6752
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