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The Happiness-Income Paradox Revisited

Author

Listed:
  • Easterlin, Richard A.

    (University of Southern California)

  • Angelescu McVey, Laura

    (University of Southern California)

  • Switek, Maggie

    (Milken Institute)

  • Sawangfa, Onnicha

    (University of Southern California)

  • Zweig, Jacqueline Smith

    (University of Southern California)

Abstract

The striking thing about the happiness-income paradox is that over the long-term – usually a period of 10 y or more – happiness does not increase as a country's income rises. Heretofore the evidence for this was limited to developed countries. This article presents evidence that the long term nil relationship between happiness and income holds also for a number of developing countries, the eastern European countries transitioning from socialism to capitalism, and an even wider sample of developed countries than previously studied. It also finds that in the short-term in all three groups of countries, happiness and income go together, i.e., happiness tends to fall in economic contractions and rise in expansions. Recent critiques of the paradox, claiming the time series relationship between happiness and income is positive, are the result either of a statistical artifact or a confusion of the short-term relationship with the long-term one.

Suggested Citation

  • Easterlin, Richard A. & Angelescu McVey, Laura & Switek, Maggie & Sawangfa, Onnicha & Zweig, Jacqueline Smith, 2011. "The Happiness-Income Paradox Revisited," IZA Discussion Papers 5799, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp5799
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    References listed on IDEAS

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    Cited by:

    1. Kamal Azza Mohamed, 2019. "Can Sleep Duration Help Explain Differences in the Happiness Index Across Nations?," Economics, Sciendo, vol. 7(2), pages 59-67, December.
    2. Cristina Sechel, 2019. "Happier Than Them, but More of Them Are Happy:Aggregating Subjective Well-Being," Working Papers 2019008, The University of Sheffield, Department of Economics.
    3. Sechel, Cristina, 2021. "The share of satisfied individuals: A headcount measure of aggregate subjective well-being," Journal of Economic Behavior & Organization, Elsevier, vol. 186(C), pages 373-394.
    4. Lous, Bjorn, 2020. "On free markets, income inequality, happiness and trust," Other publications TiSEM e2480eed-722b-4e2a-8e29-4, Tilburg University, School of Economics and Management.
    5. Dima Bogdan & Dima Ştefana Maria, 2016. "Policies for Happiness in the Global Village," Journal of Heterodox Economics, Sciendo, vol. 3(1), pages 17-53, June.
    6. Johan Graafland & Bart Compen, 2015. "Economic Freedom and Life Satisfaction: Mediation by Income per Capita and Generalized Trust," Journal of Happiness Studies, Springer, vol. 16(3), pages 789-810, June.
    7. Graafland, J.J. & Compen, B., 2012. "Economic Freedom and Life Satisfaction : A Cross Country Analysis," Other publications TiSEM b80a9d8e-af55-43fc-bad2-9, Tilburg University, School of Economics and Management.
    8. Pablo Gluzmann, 2013. "Bienestar subjetivo y crecimiento económico: analizando la paradoja del crecimiento infeliz en la Encuesta Mundial Gallup," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 59, pages 231-258, January-D.
    9. M. Azhar Hussain, 2015. "Predicting Well-Being in Europe? The Effect of the Financial Crisis," Eastern European Business and Economics Journal, Eastern European Business and Economics Studies Centre, vol. 1(2), pages 2-31.
    10. Paleologou, Suzanna-Maria, 2022. "Happiness, democracy and socio-economic conditions: Evidence from a difference GMM estimator," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 101(C).
    11. Roberson Édouard & Gérard Duhaime, 2013. "The Well-Being of the Canadian Arctic Inuit: The Relevant Weight of Economy in the Happiness Equations," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 113(1), pages 373-392, August.
    12. Liisa-Maria Palomäki, 2017. "Reference Groups and Pensioners’ Subjective Economic Well-Being in Europe," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(2), pages 509-525, March.
    13. Ruut Veenhoven & Floris Vergunst, 2014. "The Easterlin illusion: economic growth does go with greater happiness," International Journal of Happiness and Development, Inderscience Enterprises Ltd, vol. 1(4), pages 311-343.
    14. Anna Pereverzieva & Volodymyr Volkov, 2019. "The Method of Comprehensive Development Assessment based on Multy-Component Analysis," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 483-503.

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    More about this item

    Keywords

    Easterlin Paradox; life satisfaction; subjective well-being;
    All these keywords.

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • D60 - Microeconomics - - Welfare Economics - - - General

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