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Happiness and Economic Growth: Does the Cross Section Predict Time Trends? Evidence from Developing Countries

  • Easterlin, Richard A.

    ()

    (University of Southern California)

  • Sawangfa, Onnicha

    ()

    (University of Southern California)

Registered author(s):

    Based on point-of-time comparisons of happiness in richer and poorer countries, it is commonly asserted that economic growth will have a significant positive impact on happiness in poorer countries, if not richer. The time trends of subjective well-being (SWB) in 13 developing countries, however, are not significantly related to predictions derived from the cross sectional relation of happiness to GDP per capita. The point-of-time comparison leads to the expectation that the same absolute increase in GDP per capita will have a bigger impact on SWB in a poorer than a richer country. In fact there is no significant relation between actual trends in SWB and those predicted from the cross sectional relationship. Nor is a higher percentage rate of growth in GDP per capita significantly positively associated with a greater improvement in SWB. In the developing countries studied here a greater increase in happiness does not accompany more rapid economic growth. These conclusions hold true for two measures of SWB that are separately analyzed, overall life satisfaction and satisfaction with finances. The two SWB measures themselves, however, typically trend similarly within a country, providing mutually supporting evidence of the trend in well-being.

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    File URL: http://ftp.iza.org/dp4000.pdf
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    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4000.

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    Length: 46 pages
    Date of creation: Feb 2009
    Date of revision:
    Publication status: published in: E. Diener, J. Helliwell, and D. Kahneman (eds.), International Differences in Well-Being. Princeton, NJ, Princeton University Press, 2010
    Handle: RePEc:iza:izadps:dp4000
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    1. 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.
    2. Ruut Veenhoven, 2001. "Are the Russians as Unhappy as they say they are?," Journal of Happiness Studies, Springer, vol. 2(2), pages 111-136, June.
    3. Michael Hagerty & Ruut Veenhoven, 2003. "Wealth and Happiness Revisited – Growing National Income Does Go with Greater Happiness," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 64(1), pages 1-27, October.
    4. Orsolya Lelkes, 2002. "Tasting Freedom: Happiness, religion and economic transition," CASE Papers case59, Centre for Analysis of Social Exclusion, LSE.
    5. 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).
    6. Richard Easterlin, 2005. "Feeding the Illusion of Growth and Happiness: A Reply to Hagerty and Veenhoven," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 74(3), pages 429-443, December.
    7. Easterly, William, 1999. "Life during Growth," Journal of Economic Growth, Springer, vol. 4(3), pages 239-76, September.
    8. Willem Saris & Anna Andreenkova, 2001. "Following Changes in Living Conditions and Happiness in Post Communist Russia: the Russet Panel," Journal of Happiness Studies, Springer, vol. 2(2), pages 95-109, June.
    9. Takayoshi Kusago, 2007. "Rethinking of Economic Growth and Life Satisfaction in Post-Wwii Japan – A Fresh Approach," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 81(1), pages 79-102, March.
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